CEMEX, S.A.B. DE C.V.
Separate Financial Statements
December 31, 2022, 2021 and 2020
(With Independent Auditor’s Report Thereon)
INDEX TO THE PARENT COMPANY-ONLY FINANCIAL STATEMENTS
CEMEX, S.A.B. de C.V. (Parent Com
p
an
y
-Onl
y
):
Statements of Operations for the years ended December 31, 2022, 2021 and 2020 .......................................................................................... 1
Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020 .......................................................... 2
Statements of Financial Position as of December 31, 2022 and 2021 ............................................................................................................... 3
Statements of Cash Flows for the years ended Decembe
r
31, 2022, 2021 and 2020 ........................................................................................ 4
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022, 2021 and 2020 ....................................................... 5
Notes to the Financial Statements ..................................................................................................................................................................... 6
Independent Auditors’ Report – KPMG Cárdenas Dosal, S.C. ......................................................................................................................... 40
1
CEMEX, S.A.B. de C.V. (PARENT COMPANY-ONLY)
Statements of Operations
(Millions of Pesos)
For the years ended December 31,
Notes
2022 2021 2020
Revenues ....................................................................................................
3.14
,
4
$ 88,866 79,989 59,610
Cost of sales ...............................................................................................
3.15, 5
(
59,077
)
(
51,880
)
(
28,101
)
Gross profit ............................................................................................................
29,789 28,109 31,509
O
p
eratin
g
ex
p
enses ...................................................................................
3.15, 6
(
18,040
)
(
13,857
)
(
19,024
)
Operating earnings before other income (expenses), net ................................
11,749 14,252 12,485
Other income
(
ex
p
enses
)
, net ....................................................................
7
(
921
)
4,287
(
714
)
Operating earnings ..............................................................................................
10,828 18,539 11,771
Financial ex
p
ense .......................................................................................
.
8.1, 18
(
9,319
)
(
13,180
)
(
14,230
)
Financial income and other items, net. .......................................................
.
8.2
2,545 5,084 3,766
Forei
g
n exchan
g
e results ............................................................................
.
(
439
)
2,441
(
3,904
)
Share of
p
rofit of e
q
uit
y
accounted investees .............................................
.
14
12,577 2,028 (29,748)
Net income (loss) before income tax ....................................................................
.
16,192 14,912 (32,345)
Income tax ..................................................................................................
21
1,149 272 (217)
NET INCOME (LOSS) .............................................................................................
$ 17,341 15,184 (32,562)
The accompanying notes are part of these Parent Company-only financial statements.
2
CEMEX, S.A.B. de C.V. (PARENT COMPANY-ONLY)
Statements of Comprehensive Income (Loss)
(Millions of Pesos)
For the years ended December 31,
Notes
2022 2021 2020
NET INCOME (LOSS) .........................................................................................
$ 17,341 15,184 (32,562)
Items that will be reclassified subsequently to the statement of operations
Results from derivative financial instruments designated as cash
flow hedges ............................................................................................
18.4
2,105 776 (259)
Items that will not be reclassified subsequently to the statement of operations
Currenc
y
translation effects and results on e
q
uit
y
of subsidia
r
ies ...
3.3
(
12,153
)
3,998 17,537
Results from derivative financial instruments designated as net
investment hed
g
e ......................................................................
18.4
(
561
)
123 1,144
Net actuarial gains (losses) from remeasurements of defined
b
enefit
p
ension
p
lans ................................................................
20
(
33
)
(
9
)
–
Income tax recognized directly in other comprehensive income ......
21.2
519 48 (261)
Total items of other comprehensive (loss) income
for the
p
erio
d
................................................................................
(
10,123
)
4,936 18,161
TOTAL COMPREHENSIVE INCOME (LOSS) ..............................................
.
$ 7,218 20,120 (14,401)
The accompanying notes are part of these Parent Company-only financial statements.
3
CEMEX, S.A.B. de C.V. (PARENT COMPANY-ONLY)
Statements of Financial Position
(Millions of Pesos)
As of December 31,
Notes
2022 2021
ASSETS
CURRENT ASSETS
Cash and cash e
q
uivalents ...................................................................................................................
9
$ 2,652 4,556
Trade accounts receivable, net .............................................................................................................
10
4,243 3,672
Other accounts receivable ....................................................................................................................
11
1,508 1,460
Inventories ...........................................................................................................................................
12
1,121 767
Accounts receivable from related
p
arties .............................................................................................
19.1
2,976 1,688
Other current assets ............................................................................................................................
13
531 430
Total current assets ......................................................................................................................
13,031 12,573
NON-CURRENT ASSETS
E
q
uit
y
accounted investees ..................................................................................................................
14.2
355,529 362,425
Other investments and non-current accounts receivable ......................................................................
15
1,765 1,390
Accounts receivable from relate
d
-
p
arties lon
g
term ............................................................................
19.1
677 1,046
Pro
p
ert
y
, machiner
y
and e
q
ui
p
ment, net and assets for the ri
g
ht-of-use, net .......................................
16 51,399 49,664
Total non-current assets ...............................................................................................................
409,370 414,525
TOTAL ASSETS ..............................................................................................................................................
$ 422,401 427,098
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Other current financial obli
g
ations ......................................................................................................
18.2
$ 2,498 2,542
Trade
p
a
y
ables .................................................................................................................................... 6,963 7,162
Current accounts payable to related parties .........................................................................................
19.1 65,599 59,590
Other current liabilities ........................................................................................................................ 17 9,944 7,354
Total current liabilities .................................................................................................................
85,004 76,648
NON-CURRENT LIABILITIES
Non-current debt ..................................................................................................................................
18.1
128,027 141,592
Other non-current financial obli
g
ations ...............................................................................................
18.2
1,412 1,705
Pensions and other
p
ost-em
p
lo
y
ment benefits .....................................................................................
20
557 119
Non-current accounts
p
a
y
able to related
p
arties .................................................................................. 19.1 59 72
Deferred income tax liabilities .............................................................................................................
21.2 1,668 3,555
Other non-current liabilities .................................................................................................................
901 1,948
Total non-current liabilities .........................................................................................................
132,624 148,991
TOTAL LIABILITIES ....................................................................................................................................
217,628 225,639
STOCKHOLDERS’ EQUITY
Common stock and additional
p
ai
d
-in ca
p
ital .................................................................................. 22.1 105,572 105,572
Other e
q
uit
y
reserves and subordinated notes ..................................................................................
3.13 32,894 46,921
Retained earnin
g
s .............................................................................................................................
22.2
66,307 48,966
TOTAL STOCKHOLDERS’ EQUITY .........................................................................................................
204,773 201,459
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY .....................................................................
$ 422,401 427,098
The accompanying notes are part of these Parent Company-only financial statements.
4
CEMEX, S.A.B. de C.V. (PARENT COMPANY-ONLY)
Statements of Cash Flows
(Millions of Pesos)
Years ended December 31,
Notes
2022 2021 2020
OPERATING ACTIVITIES
Net income (loss) .....................................................................................................
$ 17,341 15,184 (32,562)
Adjustments fo
r
:
De
p
reciation of
p
ro
p
ert
y
, machiner
y
and e
q
ui
p
ment .............................
5, 6, 16
2,373 282 2,397
Share of profit of equity accounted investees ........................................
14
(12,577) (2,028) 29,748
Financial items, net ................................................................................
7,213 5,655 14,368
Income taxes ..........................................................................................
21.1
(1,149) (272) 217
Results from the sale of assets ...............................................................
7
(
1
)
(
50
)
6
Result from sale of emission allowances ...............................................
7
–
(4,210)
–
Chan
g
es in workin
g
ca
p
ital, excludin
g
income taxes ............................
9,578 10,297
(
14,188
)
Cash flow provided (used in) by operating activities .......................................
22,778 24,858 (14)
Financial expense pai
d
...........................................................................
(9,867) (8,255) (12,219)
Income taxes
p
ai
d
..................................................................................
21.1
(
138
)
(
470
)
(
435
)
Net cash flows provided by (used in) operating activities ...............................
12,773 16,133 (12,668)
INVESTING ACTIVITIES
E
q
uit
y
accounted investees .......................................................................
14.2
73
(
262
)
9,172
Proceeds from the sale of emission allowances ........................................
7
826 12,508
–
Purchase of emission allowances ..............................................................
7
(
826
)
(
8,298
)
–
Purchase of property, machinery and equipment ......................................
16
(3,397) (2,529) (2,045)
Non-current leases with related
p
arties .....................................................
(
625
)
–
–
(3,949) 1,419 7,127
FINANCING ACTIVITIES
Issuances of subordinated notes ...............................................................
22.3
– 19,786 –
Coupons paid on subordinated notes .......................................................
22.1
(1,096) (268) –
Non-current related parties, net ................................................................
19.1
925 (995) (35)
Derivative financial instruments ...............................................................
18.4
684 (841) 270
Proceeds from new debt instruments ........................................................
18.1
39,947 84,333 138,921
Debt repayments .......................................................................................
18.1
(47,113) (119,222) (119,600)
Other financial obligations, net .................................................................
18.2
(853) (1,318) (10,718)
Shares repurchase program .......................................................................
22.1
(2,296) – (1,894)
Shares in trust for future deliveries under share-based compensation ......
22.4
(733) – –
Non-current leases paid to related parties .................................................
57 – –
Other financial expenses paid in cash .......................................................
18.1
(250) (280) (274)
Net cash flows (used in) provided by financing activities .............................
(10,728) (18,805) 6,670
Increase
(
decrease
)
in cash and cash e
q
uivalents .................................
(
1,904
)
(
1,253
)
1,129
Cash and cash equivalents at beginning of
p
erio
d
...............................
4,556 5,809 4,680
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................
9
$ 2,652 4,556 5,809
Changes in working capital, excluding income taxes:
Trade accounts receivable, net ..............................................................
10
$ (571) 517 (323)
Other accounts receivable ......................................................................
11
(
48
)
(
313
)
(
54
)
Inventories .............................................................................................
12
(354) 3,007 (303)
Current related
p
arties, net .....................................................................
19.1
8,160 9,758
(
15,481
)
Trade payables ......................................................................................
(199) (3,648) 1,774
Other current liabilities ..........................................................................
17
2,590 976 199
Changes in working capital, excluding income taxes ......................................
$ 9,578 10,297 (14,188)
The accompanying notes are part of these Parent Company-only financial statements.
5
CEMEX, S.A.B. de C.V. (PARENT COMPANY-ONLY)
Statements of Changes in Stockholders’ Equity
For the years ended December 31, 2022, 2021 and 2020
(Millions of Pesos)
Notes Common stoc
k
Additional paid-in
ca
p
ital
Other equity Reserves
and subordinated notes Retained earnin
g
s
Total stockholders’
e
q
uit
y
Balance as of December 31, 2019 ........................................................................
$ 4,172 141,925 1,534 28,705 176,336
Comprehensive income (loss), net .........................................................................
– – 18,161 (32,562) (14,401)
Restitution of retained earnings .............................................................................
22.1
– (37,639) – 37,639 –
Share–based compensation ....................................................................................
22.1
– – 563 – 563
Own shares purchased under share repurchase program .......................................
22.1
(5) (986) (903) – (1,894)
Balance as of December 31, 2020 ........................................................................
$
4,167 103,300 19,355 33,782 160,604
Comprehensive income (loss), net .........................................................................
– – 4,936 15,184 20,120
Issuance of subordinated notes ..............................................................................
22.3
– – 19,786 – 19,786
Coupons paid on subordinated notes .....................................................................
22.3
– – (604) – (604)
Share–based compensation ....................................................................................
22.4
– – 1,553 – 1,553
Own shares purchased under share repurchase program .......................................
22.1
(3) (1,892) 1,895 – –
Balance as of December 31, 2021 ........................................................................
$
4,164 101,408 46,921 48,966 201,459
Comprehensive income (loss), net .........................................................................
– – (10,123) 17,341 7,218
Coupons paid on subordinated notes .....................................................................
22.3
– – (1,079) – (1,079)
Share–based compensation ....................................................................................
22.4
– – 895 – 895
Transfer of employees’ rights and obligations ......................................................
2, 20
– – (691) – (691)
Shares in trust for future deliveries under share-based compensation ..................
22.4
– – (733) – (733)
Own shares purchased under share repurchase program .......................................
22.1
– – (2,296) – (2,296)
Balance as of December 31, 2022 ........................................................................
$
4,164 101,408 32,894 66,307 204,773
The accompanying notes are part of these Parent Company-only financial statements.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
6
1) DESCRIPTION OF BUSINESS
CEMEX, S.A.B. de C.V., originated in 1906, is a publicly traded variable stock corporation (sociedad anónima bursátil de capital variable) organized
under the laws of the United Mexican States, or Mexico, and is the parent company of entities whose main activities are oriented to the construction
industry, through the production, marketing, sale and distribution of cement, ready-mix concrete, aggregates and other construction materials and
services, including urbanization solutions. In addition, CEMEX, S.A.B. de C.V. performs significant business and operational activities in Mexico.
The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange (“MSE”) as Ordinary Participation Certificates (“CPOs”)
(Certificados de Participación Ordinaria) under the symbol “CEMEXCPO.” Each CPO represents two series “A” shares and one series “B” share of
common stock of CEMEX, S.A.B. de C.V. In addition, CEMEX, S.A.B. de C.V.’s shares are listed on the New York Stock Exchange (“NYSE”) as
American Depositary Shares (“ADSs”) under the symbol “CX.” Each ADS represents ten CPOs.
The terms “CEMEX, S.A.B. de C.V.” and/or the “Parent Company” used in these accompanying notes to the financial statements refer to CEMEX,
S.A.B. de C.V. without its consolidated subsidiaries. The terms the “Company” or “CEMEX” refer to CEMEX, S.A.B. de C.V. together with its
consolidated subsidiaries.
The issuance of these financial statements was authorized by CEMEX, S.A.B. de C.V.´s management on February 16, 2023. These financial statements
will be submitted for approval to the Annual General Ordinary Shareholders' Meeting of CEMEX, S.A.B. de C.V. on March 23, 2023.
2) RELEVANT EVENT DURING THE PERIOD AND AS OF THE ISSUANCE DATE OF THE FINANCIAL STATEMENTS
On January 1, 2022, a group of employees of CEMEX Operaciones México, S.A. de C.V., a subsidiary of CEMEX, S.A.B. de C.V., was transferred to
the Parent Company. Concerning such transfer, CEMEX, S.A.B. de C.V. acquired the rights and obligations related to the employees; additionally,
CEMEX, S.A.B. de C.V. acquired certain assets necessary for the functions of such employees.
Corporate reorganization
On August 1, 2021, CEMEX, S.A.B. de C.V., formalized a corporate reorganization of some operational activities in Mexico ("corporate
reorganization") pursuant to which CEMEX, S.A.B. de C.V. transferred certain activities related to the production of cement, ready-mix concrete, and
aggregates to its subsidiaries CEMEX Operaciones México, S.A. de C.V. and CEMEX Concretos, S.A. de C.V. CEMEX, S.A.B. de C.V. in conjunction
with its subsidiaries CEMEX Concretos, S.A. de C.V. and Proveedora Mexicana de Materiales, S.A. de C.V., continues to carry out activities related
to the commercialization, promotion, and sale of cement and ready-mix concrete products to customers. In addition, on August 1, 2021, CEMEX
Operaciones México, S.A. de C.V., entered into an agreement contract to supply CEMEX, S.A.B. de C.V. of the products, which it will commercialize
following the corporate restructuring. CEMEX, S.A.B. de C.V., recognized assets and liabilities transfer at their book value as it is a transaction between
common control entities. CEMEX, S.A.B. de C.V. accounted for any difference between the price and the book value in stockholders' equity (note
14.1).
3) SIGNIFICANT ACCOUNTING POLICIES
3.1) BASIS OF PRESENTATION AND DISCLOSURE
CEMEX, S.A.B. de C.V.’s financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, were
prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
Separate financial statements
The parent company-only financial statements of CEMEX, S.A.B. de C.V. presented herein constitute the separate financial statements of a parent
company as defined by International Accounting Standard 27 - Separate Financial Statements (“IAS 27”). Separate Financial Statements reflect the
Parent Company’s unconsolidated financial position, financial performance, cash flows and changes in stockholders’ equity as of December 31, 2022
and 2021 and for the years ended December 31, 2022, 2021 and 2020. The consolidated financial statements of CEMEX, S.A.B. de C.V. and its
subsidiaries were issued separately.
Presentation currency and definition of terms
During the reported periods, the presentation currency of the financial statements was the Mexican Peso. When reference is made to Pesos or “$” it
means Mexican Pesos, except when specific reference is made to a different currency. The amounts in the financial statements and the accompanying
notes are stated in millions, except when references are made to earnings per share and/or prices per share. When reference is made to “US$” or
“Dollars,” it means Dollars of the United States of America (“United States”). When reference is made to “€” or “Euros,” it means the currency in
circulation in a significant number of European Union (“EU”) countries. When reference is made to “£” or “Pounds,” it means British Pounds sterling.
Previously reported Peso amounts of prior years are not restated unless the transactions in other currencies are still outstanding, in which case those are
restated using the closing exchange rates as of the reporting date. Amounts reported in Pesos should not be construed as representations that such
amounts, represent those Pesos or Dollars or could be converted into Pesos or Dollars at the rate indicated. As of December 31, 2022 and 2021,
translations of Pesos into Dollars and Dollars into Pesos, were determined for statement of financial position amounts using the closing exchange rate of
$19.50 and $20.50, respectively, and for statements of operations amounts, using the average exchange rates of $20.03, $20.43 and $21.58 Pesos per Dollar
for 2022, 2021 and 2020, respectively. When the amounts between parentheses are the Peso and the Dollar, the amounts were determined by translating
the Euro amount into Dollars using the closing exchange rates at year-end and then translating the Dollars into Pesos as previously described.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
7
Statements of operations
CEMEX, S.A.B. de C.V. includes the line item titled “Operating earnings before other income (expenses), net” considering that it is subtotal relevant
for the determination of CEMEX’s “Operating EBITDA” (Operating earnings before other income (expenses), net plus depreciation and amortization)
as described below in this note. The line item “Other income (expenses), net” consists primarily of revenues and expenses not directly related to
CEMEX, S.A.B. de C.V.’s main activities or which are of a non-recurring nature, including impairment losses of long-lived assets, non-recurring sales
of emission allowances, results on disposal of assets and restructuring costs, among others (note 7). Under IFRS, the inclusion of certain subtotals such
as “Operating earnings before other income (expenses), net” and the display of the statement of operations vary significantly by industry and company
according to specific needs.
Considering that it is a relevant measure used by management to review operating performance and for decision-making purposes, as well as an
indicator used by CEMEX, S.A.B. de C.V.’s creditors of its ability to internally fund capital expenditures and to measure its ability to service or incur
debt under financing agreements, for purposes of note 18, CEMEX, S.A.B. de C.V. presents “Operating EBITDA” (operating earnings before other
income (expenses), net, plus depreciation and amortization). Operating EBITDA is not a measure of financial performance, an alternative to cash flows,
or a measure of liquidity under IFRS. Moreover, Operating EBITDA may not be comparable to other similarly titled measures of other companies.
Statements of cash flows
During 2021, except for the cash and cash equivalents received and disclosed in the statements of cash flows, the effects of the corporate reorganization
as described in note 14.1, did not represent sources or uses of cash in the operating, investing or financing activities. In addition, the statements of cash
flows exclude the following transactions that did not represent sources or uses of cash:
Financing activities:
In 2022, 2021 and 2020, the increases in other financing obligations in connection with lease contracts negotiated during those years for $746, $438 and
$723, respectively (note 18.2).
Investing activities:
In 2022, 2021 and 2020, in connection with the leases negotiated during the year, the increases in assets for the right-of-use related to lease contracts for
$746 (US$38), $438 (US$21) and $723 (US$36), respectively (note 16.2).
Newly issued IFRS adopted in the reported periods
Beginning January 1, 2022, CEMEX, S.A.B. de C.V. adopted prospectively IFRS amendments that did not result in any material impact on its results or
financial position, and which are explained as follows:
Standard Main topic
Amendment to IAS 37, Provisions,
Contingent Liabilities and Contingent
Assets – Onerous Contracts—Cost of
Fulfilling a Contract ..................................
Clarifies that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract.’
Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an
allocation of other costs that relate directly to fulfilling contracts.
Amendments to IAS 16, Property, Plant and
Equipment –Proceeds before Intended
Use ............................................................
Clarifies the standard to prohibit deducting from the cost of an item of property, plant and equipment
any proceeds from selling items produced while bringing that asset to the location and condition
necessar
y
for it to be ca
p
able of o
p
eratin
g
in the manner intended b
y
mana
g
ement.
Annual improvements (2018-2020 cycle):
IFRS 1, First-time Adoption of IFRS –
Subsidiary as a First-time Adopte
r
...........
The amendment permits a subsidiary to measure cumulative translation differences using the amounts
reported by its parent, based on the parent’s date of transition to IFRSs.
Annual improvements (2018-2020 cycle):
IFRS 9, Financial Instruments – Fees in
the ‘10 per cent’ Test for Derecognition
of Financial Liabilities ..............................
The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in assessing
whether to derecognize a financial liability. An entity includes only fees paid or received between the
entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on
the other’s behalf.
Amendments to IFRS 3, Business
Combinations – Reference to the
conceptual framewor
k
..............................
Update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing
the accounting requirements for business combinations.
3.2) USE OF ESTIMATES AND CRITICAL ASSUMPTIONS
The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the period. These assumptions are reviewed on an ongoing basis using available information. Actual results
could differ from these estimates. The items subject to significant estimates and assumptions by management include impairment tests of long-lived
assets, recognition of deferred income tax assets and uncertain tax positions, the measurement of financial instruments at fair value, the assets and
liabilities related to employee benefits, legal proceedings and provisions regarding assets retirements obligations and environmental liabilities.
Significant judgment is required by management to appropriately assess the amounts of these concepts.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
8
3.3) FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currencies are recorded in the functional currency at the exchange rates prevailing on the dates of their execution.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the
statement of financial position date, and the resulting foreign exchange fluctuations are recognized in earnings, except for exchange fluctuations arising
from: 1) foreign currency indebtedness associated with the acquisition of foreign entities; and 2) fluctuations associated with related parties’ balances
denominated in foreign currency, whose settlement is neither planned nor likely to occur in the foreseeable future and as a result, such balances are of
a permanent investment nature. These fluctuations are recorded against “Other equity reserves,” as part of the foreign currency translation adjustment
(note 3.12) until the disposal of the foreign net investment, at which time, the accumulated amount is recognized through the statement of operations
as part of the gain or loss on disposal.
The financial statements of foreign subsidiaries, as determined using their respective functional currency, are translated to U.S. Dollars and then to
Pesos at the closing exchange rate for the statement of financial position and at the closing exchange rates of each month within the period for the
statement of operations. The functional currency is that in which each consolidated entity primarily generates and expends cash. The corresponding
translation effect is included within “Other equity reserves” and is presented in the statement of other comprehensive income for the period as part of
the foreign currency translation adjustment (note 3.12) until the disposal of the net investment in the foreign subsidiary.
Considering its integrated activities, for purposes of functional currency, CEMEX, S.A.B. de C.V. is considered to have two divisions, one related with
its financial and holding company activities, in which the functional currency is the Dollar for all assets, liabilities and transactions associated with
these activities, and another division related with the CEMEX, S.A.B. de C.V.’s operating activities in Mexico, in which the functional currency is the
Peso for all assets, liabilities and transactions associated with these activities.
The most significant closing exchange rates for the statement of financial position and the approximate average exchange rates (as determined using
the closing exchange rates of each month within the period) for the statement of operations in respect to the primary functional currencies to the Peso
as of December 31, 2022, 2021 and 2020, were as follows:
2022 2021
2020
Currency Closing Average Closing Average Closing Average
Dolla
r
............................
19.50 20.03
20.50 20.43
19.89 21.58
Euros .............................
0.9344 0.9522
0.8789 0.8467
24.3065 24.6985
British Pound Sterlin
g
...
0.8266 0.8139
0.7395 0.7262
27.1981 27.8121
3.4) CASH AND CASH EQUIVALENTS (note 9)
The balance in this caption is comprised of available amounts of cash and cash equivalents, mainly represented by highly liquid short-term investments,
which are readily convertible into known amounts of cash, and which are not subject to significant risks of changes in their values, including overnight
investments, which yield fixed returns and have maturities of less than three months from the investment date. These fixed-income investments are
recorded at cost plus accrued interest. Accrued interest is included in the statement of operations as part of “Financial income and other items, net.”
When applicable, the amount of cash and cash equivalents in the statement of financial position includes restricted cash and investments to the extent
that any restriction will be lifted in less than three months from the reporting date, comprised of deposits in margin accounts that guarantee certain
obligations, except when contracts contain provisions for net settlement, in which case, these restricted amounts of cash and cash equivalents are offset
against the liabilities that CEMEX, S.A.B. de C.V. has with its counterparties. When the restriction period is greater than three months, any restricted
balance of cash and investments is not considered cash equivalents and is included within short-term or long-term “Other accounts receivable,” as
appropriate.
3.5) FINANCIAL INSTRUMENTS
Classification and measurement of financial instruments
The financial assets that meet both of the following conditions and are not designated as at fair value through profit or loss: a) are held within a business
model whose objective is to hold assets to collect contractual cash flows, and b) its contractual terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding, are classified as “Held to collect” and measured at amortized cost.
Amortized cost represents the Net Present Value (“NPV”) of the consideration receivable or payable as of the transaction date. This classification of
financial assets comprises the following captions:
Cash and cash equivalents (notes 3.4 and 9).
Trade receivables, other current accounts receivable and other current assets (notes 10, 11 and 13). Due to their short-term nature, CEMEX, S.A.B.
de C.V. initially recognizes these assets at the original invoiced or transaction amount less expected credit losses, as explained below.
Trade receivables sold under securitization programs, in which certain residual interest and continued involvement in the trade receivables sold is
maintained in the case of failure to collect, do not qualify for derecognition and are maintained in the statement of financial position (notes 10 and
18.2).
Investments and non-current accounts receivable (note 15). Subsequent changes in effects from amortized cost are recognized in statement of
operations as part of “Financial income and other items, net.”
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
9
Classification and measurement of financial instruments - continued
Certain strategic investments are measured at fair value through other comprehensive income within “Other equity reserves” (notes 3.12 and 15).
CEMEX, S.A.B. de C.V. does not maintain financial assets “Held to collect and sell” whose business model has the objective of collecting contractual
cash flows and then selling those financial assets.
The financial assets that are not classified as “Held to collect” or that do not have strategic characteristics fall into the residual category of held at fair
value through the statement of operations as part of “Financial income and other items, net,” (notes 8.2 and 15).
Debt instruments and other financial obligations are classified as “Loans” and measured at amortized cost (notes 18.1 and 18.2). Interest accrued on
financial instruments is recognized within “Other current liabilities” against financial expense. During the reported periods, CEMEX, S.A.B. de C.V.
did not have financial liabilities voluntarily recognized at fair value or associated with fair value hedge strategies with derivative financial instruments.
Derivative financial instruments are recognized as assets or liabilities in the statement of financial position at their estimated fair values, and the changes
in such fair values are recognized in the statement of operations within “Financial income and other items, net” for the period in which they occur,
except in the case of hedging instruments as described below (notes 8.2 and 18.4).
Impairment of financial assets
Impairment losses of financial assets, including trade accounts receivable, are recognized using the Expected Credit Loss model (“ECL”) for the entire
lifetime of such financial assets on initial recognition, and at each subsequent reporting period, even in the absence of a credit event or if a loss has not
yet been incurred, considering for their measurement past events and current conditions, as well as reasonable and supportable forecasts affecting
collectability. For purposes of the ECL model of trade accounts receivable, CEMEX, S.A.B. de C.V. segments its accounts receivable in a matrix by
type of client or homogeneous credit risk and days past due and determines for each segment an average rate of ECL, considering actual credit loss
experience generally over the last 12 months and analyses of future delinquency, which is applied to the balance of the accounts receivable. The average
ECL rate increases in each segment of days past due until the rate is 100% for the segment of 365 days or more past due.
Costs incurred in the issuance of debt or borrowings
Direct costs incurred in debt issuances or borrowings, as well as debt refinancing or non-substantial modifications to debt agreements that did not
represent an extinguishment of debt by considering that the holders and the relevant economic terms of the new instrument are not substantially different
to the replaced instrument, adjust the carrying amount of the related debt and are amortized as interest expense as part of the effective interest rate of
each instrument over its maturity. These costs include commissions and professional fees. Costs incurred in the extinguishment of debt, as well as debt
refinancing or modifications to debt agreements, when the new instrument is substantially different from the old instrument according to a qualitative
and quantitative analysis, are recognized in the statement of operations as incurred.
Leases (notes 3.8, 16 and 18.2)
At the inception of a contract, CEMEX, S.A.B. de C.V. assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if at
inception of the contract, conveys the right to control the use of an identified asset for a period in exchange for consideration, based on IFRS 16, Leases
(“IFRS 16”). to assess whether a contract conveys the right to control the use of an identified asset.
Pursuant to IFRS 16, leases are recognized as financial liabilities against assets for the right-of-use, measured at their commencement date as the net
present value (“NPV”) of the future contractual fixed payments, using the interest rate implicit in the lease or, if that rate cannot be readily determined,
CEMEX, S.A.B. de C.V.’s incremental borrowing rate. CEMEX, S.A.B. de C.V. determines its incremental borrowing rate by obtaining interest rates
from its external financing sources and makes certain adjustments to reflect the term of the lease, the type of the asset leased and the economic
environment in which the asset is leased.
CEMEX, S.A.B. de C.V. does not separate the non-lease component from the lease component included in the same contract. Lease payments included
in the measurement of the lease liability comprise contractual rental fixed payments, less incentives, fixed payments of non-lease components and the
value of a purchase option, to the extent that option is highly probable to be exercised or is considered a bargain purchase option. Interest incurred
under the financial obligations related to lease contracts is recognized as part of the “Financial expense” line item in the statement of operations.
At commencement date or upon modification of a contract that contains a lease component, CEMEX, S.A.B. de C.V. allocates the consideration in the
contract to each lease component based on their relative stand-alone prices. CEMEX, S.A.B. de C.V. applies the recognition exception for lease terms
of 12 months or less and contracts of low-value assets and recognizes the lease payment of these leases as rental expense in the statement of operations
over the lease term. CEMEX, S.A.B. de C.V. defined the lease contracts related to office and computer equipment as low-value assets.
The lease liability is measured at amortized cost using the effective interest method as payments are incurred and is remeasured when: a) there is a
change in future lease payments arising from a change in an index or rate, b) if there is a change in the amount expected to be payable under a residual
guarantee, c) if the Parent Company changes its assessment of whether it will exercise a purchase, extension or termination option, or d) if there is a
revised in-substance fixed lease payment. When the lease liability is remeasured, an adjustment is made to the carrying amount of the asset for the
right-of-use or is recognized within “Financial income and other items, net” if such asset has been reduced to zero.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
10
Hedging instruments
(note 18.4)
A hedging relationship is established to the extent the entity considers, based on the analysis of the overall characteristics of the hedging and hedged
items, that the hedge will be highly effective in the future and the hedge relationship at inception is aligned with the entity’s reported risk management
strategy (note 18.4). The accounting categories of hedging instruments are: a) cash flow hedge, b) fair value hedge of an asset or forecasted transaction,
and c) hedge of a net investment in a subsidiary.
In cash flow hedges, the effective portion of changes in fair value of derivative instruments are recognized in stockholders’ equity within other equity
reserves and are reclassified to earnings as the interest expense of the related debt is accrued, in the case of interest rate swaps, or when the underlying
products are consumed in the case of contracts on the price of raw materials and commodities. In hedges of the net investment in foreign subsidiaries,
changes in fair value are recognized in stockholders’ equity as part of the foreign currency translation gains and losses within other equity reserves
(note 3.5), whose reversal to earnings would take place upon disposal of the foreign investment. During the reported periods, CEMEX, S.A.B. de C.V.
did not have derivatives designated as fair value hedges. Derivative instruments are negotiated with institutions with significant financial capacity;
therefore, CEMEX, S.A.B. de C.V. believes the risk of non-performance of the obligations agreed to by such counterparties to be minimal.
Embedded derivative financial instruments
CEMEX, S.A.B. de C.V. reviews its contracts to identify the existence of embedded derivatives. Identified embedded derivatives are analyzed to
determine if they need to be separated from the host contract and recognized in the statement of financial position as assets or liabilities, applying the
same valuation rules used for other derivative instruments.
Put options granted for the purchase of non-controlling interests
Under IFRS 9, represent agreements by means of which a non-controlling interest has the right to sell, at a future date using a predefined price formula
or at fair market value, its shares in a consolidated subsidiary. When the obligation should be settled in cash or through the delivery of another financial
asset, an entity should recognize a liability for the NPV of the redemption amount as of the reporting date against the controlling interest within
stockholders’ equity. A liability is not recognized under these agreements when the redemption amount is determined at fair market value at the exercise
date and the entity has the election to settle using its own shares. As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. did not have written
put options.
Fair value measurements
(note 18.3)
Under IFRS, fair value represents an “Exit Value” which is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, considering the counterparty’s credit risk in the valuation. The concept of Exit Value
is premised on the existence of a market and market participants for the specific asset or liability. When there are no market and/or market participants
willing to make a market, IFRS establishes a fair value hierarchy that gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3
measurements).
The three levels of the fair value hierarchy are as follows:
Level 1.- represent quoted prices (unadjusted) in active markets for identical assets or liabilities that CEMEX, S.A.B. de C.V. can access at the
measurement date. A quote price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure
fair value whenever available.
Level 2.- are inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly, and are used
mainly to determine the fair value of securities, investments or loans that are not actively traded. Level 2 inputs included equity prices, certain
interest rates and yield curves, implied volatility and credit spreads, among others, as well as inputs extrapolated from other observable inputs. In
the absence of Level 1 inputs, CEMEX, S.A.B. de C.V. determined fair values by iteration of the applicable Level 2 inputs, the number of securities
and/or the other relevant terms of the contract, as applicable.
Level 3.- inputs are unobservable inputs for the asset or liability. CEMEX, S.A.B. de C.V. used unobservable inputs to determine fair values, to the
extent there are no Level 1 or Level 2 inputs, in valuation models such as Black-Scholes, binomial, discounted cash flows or multiples of Operating
EBITDA, including risk assumptions consistent with what market participants would use to arrive at fair value.
3.6) INVENTORIES
(note 12)
Inventories are valued using the lower of cost or net realizable value. The cost of inventories is based on weighted average cost formula and includes
expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location
and condition. CEMEX, S.A.B. de C.V. analyzes its inventory balances to determine if, because of internal events, such as physical damage, or external
events, such as technological changes or market conditions, certain portions of such balances have become obsolete or impaired. When an impairment
situation arises, the inventory balance is adjusted to its net realizable value. In such cases, these adjustments are recognized against the results of the
period. Advances to suppliers of inventory are presented as part of other current assets.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
11
Inventories – continued
In connection with the corporate reorganization (notes 2 and 14.1), commencing August 2021, CEMEX, S.A.B. de C.V., purchases its merchandise in
a form of ready for sale. In connection with purchasing merchandise ready to be sold, CEMEX, S.A.B. de C.V., acquires such merchandise mainly
with related parties (note 19). CEMEX, S.A.B. de C.V. reports its inventories at the acquisition cost.
3.7) EQUITY ACCOUNTED INVESTEES (note 14.2)
Investments in controlled entities and in entities over which CEMEX, S.A.B. de C.V. exercises significant influence, which are not classified as available
for sale, are measured using the equity method.
3.8) PROPERTY, MACHINERY AND EQUIPMENT AND RIGHT OF USE (note 16)
Property, machinery and equipment are recognized at their acquisition or construction cost, as applicable, less accumulated depreciation and
accumulated impairment losses. Depreciation of property, machinery and equipment is recognized as part of cost and operating expenses (notes 5 and
6) and is calculated using the straight-line method over the estimated useful lives of the assets, except for mineral reserves, which are depleted using
the units-of-production method. As of December 31, 2022, the average useful lives by category of property, machinery and equipment, which are
reviewed at each reporting date and adjusted if appropriate, were as follows:
Years
Administrative and industrial buildin
g
s ...................................................................................................................................................... 35
Machinery and equipment in plant .............................................................................................................................................................
25
Ready-mix trucks and motor vehicles ........................................................................................................................................................
10
Office equipment and other assets .............................................................................................................................................................
5
Assets for the right-of-use related to leases are initially measured at cost, comprised by the initial amount of the lease liability adjusted by any payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle, remove or restore the underlying
asset, less any lease incentives received. The asset for the right-of-use is subsequently depreciated using the straight-line method from the
commencement date to the end of the lease term, unless the lease transfers ownership of the underlaying asset to CEMEX, S.A.B. de C.V. by the end
of the lease term or if the cost of the asset for the right-of-use reflects that CEMEX, S.A.B. de C.V. will exercise a purchase option. In that case the
asset for the right-of-use would be depreciated over the useful life of the underlying asset, on the same basis as those of property, machinery and
equipment. In addition, assets for the right-of-use may be reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease
liability.
CEMEX, S.A.B. de C.V. capitalizes, as part of the related cost of property, machinery and equipment, interest expense from existing debt during the
construction or installation period of significant property, machinery and equipment, considering CEMEX, S.A.B. de C.V.’s corporate average interest
rate and the average balance of investments in process for the period.
All waste removal costs or stripping costs incurred in the pre-operative phase of a quarry are recognized as part of its carrying amount. The capitalized
amounts are amortized over the expected useful life of exposed ore body based on the units of production method.
Costs incurred in respect of operating fixed assets that result in future economic benefits, such as an extension in their useful lives, an increase in their
production capacity or in safety, as well as those costs incurred to mitigate or prevent environmental damage, are capitalized as part of the carrying
amount of the related assets. The capitalized costs are depreciated over the remaining useful lives of such fixed assets. Periodic maintenance of fixed
assets is expensed as incurred. Advances to suppliers of fixed assets are presented as part of other non-current accounts receivable.
3.9) IMPAIRMENT OF LONG-LIVED ASSETS (notes 15 and 16)
Property, machinery and equipment, assets for the right-of-use and other investments
These assets are tested for impairment upon the occurrence of internal or external indicators of impairment, such as changes in CEMEX, S.A.B. de
C.V.’s operating business model or in technology that affect the asset, or expectations of lower operating results, to determine whether their carrying
amounts may not be recovered. An impairment loss is recorded in the statement of operations for the period within “Other income (expenses), net” for
the excess of the asset’s carrying amount over its recoverable amount, corresponding to the higher of the fair value less costs to sell the asset, as
generally determined by an external appraiser, and the asset’s value in use, the latter represented by the NPV of estimated cash flows related to the use
and eventual disposal of the asset. The main assumptions utilized to develop estimates of NPV are a discount rate that reflects the risk of the cash flows
associated with the assets and the estimations of generation of future income. Those assumptions are evaluated for reasonableness by comparing such
discount rates to available market information and by comparing to third-party expectations of industry growth, such as governmental agencies or
industry chambers.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
12
Property, machinery and equipment, assets for the right-of-use and other investments – continued
When impairment indicators exist, for each intangible asset, CEMEX, S.A.B. de C.V. determines its projected revenue streams over the estimated
useful life of the asset. To obtain discounted cash flows attributable to each intangible asset, such revenue is adjusted for operating expenses, changes
in working capital and other expenditures, as applicable, and discounted to NPV using the risk adjusted discount rate of return. The most significant
economic assumptions are: a) the useful life of the asset; b) the risk adjusted discount rate of return; c) royalty rates; and d) growth rates. Assumptions
used for these cash flows are consistent with internal forecasts and industry practices. The fair values of these assets are significantly sensitive to
changes in such relevant assumptions. Certain key assumptions are more subjective than others. In respect of trademarks, CEMEX, S.A.B. de C.V.
considers that the most subjective key assumption is the royalty rate. In respect of extraction rights and customer relationships, the most subjective
assumptions are revenue growth rates and estimated useful lives. CEMEX, S.A.B. de C.V. validates its assumptions through benchmarking with
industry practices and the corroboration of third-party valuation advisors. Significant judgment by management is required to appropriately assess the
fair values and values in use of the related assets, as well as to determine the appropriate valuation method and select the significant economic
assumptions.
Equity accounted investees
Equity accounted investees are tested for impairment when required due to significant adverse changes, by determining the recoverable amount of such
investment, which consists of the higher of the investment in subsidiaries and associates’ fair value, less cost to sell and value in use, represented by
the discounted amount of estimated future cash flows to be generated to which those net assets relate. CEMEX, S.A.B. de C.V. initially determines its
discounted cash flows over periods of 5 to 10 years, depending on the economic cycle. If the value in use of the equity accounted investees is lower
than its corresponding carrying amount, the Parent Company determines the fair value of its investment using methodologies generally accepted in the
market to determine the value of entities, such as multiples of Operating EBITDA and by reference to other market transactions. An impairment loss
is recognized within “Other income (expenses), net”, if the recoverable amount is lower than the net book value of the investment.
3.10) PROVISIONS (note 17)
CEMEX, S.A.B. de C.V. recognizes provisions when it has a legal or constructive obligation resulting from past events, whose resolution would require
cash outflows, or the delivery of other resources owned by the Parent Company. As of December 31, 2022 and 2021, some significant proceedings that
gave rise to a portion of the carrying amount of CEMEX, S.A.B. de C.V.’s other current and non-current liabilities and provisions are detailed in note
23.
Considering guidance under IFRS, CEMEX, S.A.B. de C.V. recognizes provisions for levies imposed by governments when the obligating event or
the activity that triggers the payment of the levy has occurred, as defined in the legislation.
Contingencies and commitments (notes 23 and 24)
Obligations or losses related to contingencies are recognized as liabilities in the statement of financial position only when present obligations exist
resulting from past events that are probable to result in an outflow of resources and the amount can be measured reliably. Otherwise, a qualitative
disclosure is included in the notes to the financial statements. The effects of long-term commitments established with third parties, such as supply
contracts with suppliers or customers, are recognized in the financial statements on an incurred or accrued basis, after taking into consideration the
substance of the agreements. Relevant commitments are disclosed in the notes to the financial statements. CEMEX, S.A.B. de C.V. recognizes
contingent revenues, income or assets only when their realization is virtually certain.
3.11) PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS (note 20)
Defined contribution pension plans
The costs of defined contribution pension plans are recognized in the operating results as they are incurred. Liabilities arising from such plans are
settled through cash transfers to the employees’ retirement accounts, without generating future obligations.
Defined benefit pension plans and other post-employment benefits
The costs associated with employees’ benefits for defined benefit pension plans and other post-employment benefits, generally comprised of health
care benefits, life insurance and seniority premiums, granted by CEMEX, S.A.B de C.V and/or pursuant to applicable law, are recognized as services
are rendered by the employees based on actuarial estimations of the benefits’ present value considering the advice of external actuaries. For certain
pension plans, CEMEX, S.A.B de C.V has created irrevocable trust funds to cover future benefit payments (“plan assets”). These plan assets are valued
at their estimated fair value at the statement of financial position date. The actuarial assumptions and accounting policy consider: a) the use of nominal
rates; b) a single rate is used for the determination of the expected return on plan assets and the discount of the benefits obligation to present value; c)
a net interest is recognized on the net defined benefit liability (liability minus plan assets); and d) all actuarial gains and losses for the period, related
to differences between the projected and real actuarial assumptions at the end of the period, as well as the difference between the expected and real
return on plan assets, are recognized as part of “Other items of comprehensive income, net” within stockholders’ equity.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
13
Property, machinery and equipment, assets for the right-of-use and other investments – continued
The service cost, corresponding to the increase in the obligation for additional benefits earned by employees during the period, is recognized within
operating costs and expenses. The net interest cost, resulting from the increase in obligations for changes in NPV and the change during the period in
the estimated fair value of plan assets, is recognized within “Financial income and other items, net.”
The effects from modifications to the pension plans that affect the cost of past services are recognized within operating costs and expenses over the
period in which such modifications become effective to the employees or without delay if changes are effective immediately. Likewise, the effects
from curtailments and/or settlements of obligations occurring during the period, associated with events that significantly reduce the cost of future
services and/or significantly reduce the population subject to pension benefits, respectively, are recognized within operating costs and expenses.
Termination benefits
Termination benefits, not associated with a restructuring event, which mainly represent severance payments by law, are recognized in the operating
results for the period in which they are incurred.
3.12) INCOME TAXES
(note 21)
The effects reflected in the statement of operations for income taxes include the amounts incurred during the period and the amounts of deferred income
taxes, determined according to the income tax law applicable, reflecting uncertainty in income tax treatments, if any. Deferred income taxes represent
the addition of the amounts determined by applying the enacted statutory income tax rate to the total temporary differences resulting from comparing
the book and taxable values of assets and liabilities, considering tax assets such as loss carryforwards and other recoverable taxes, to the extent that it
is probable that future taxable profits will be available against which they can be utilized. The measurement of deferred income taxes at the reporting
period reflects the tax consequences that follow the way in which CEMEX, S.A.B. de C.V. expects to recover or settle the carrying amount of its assets
and liabilities. Deferred income taxes for the period represent the difference between balances of deferred income taxes at the beginning and the end
of the period. According to IFRS, all items charged or credited directly in stockholders’ equity or as part of other comprehensive income or loss for the
period are recognized net of their current and deferred income tax effects. The effect of a change in enacted statutory tax rates is recognized in the
period in which the change is officially enacted.
Deferred tax assets are reviewed at each reporting date and are derecognized when it is not deemed probable that the related tax benefit will be realized,
considering the aggregate amount of self-determined tax loss carryforwards that CEMEX, S.A.B. de C.V. believes will not be rejected by the tax
authorities based on available evidence and the likelihood of recovering them prior to their expiration through an analysis of estimated future taxable
income. If it is probable that the tax authorities would reject a self-determined deferred tax asset, CEMEX, S.A.B. de C.V. would derecognize such asset.
When it is considered that a deferred tax asset will not be recovered before its expiration, CEMEX, S.A.B. de C.V. would not recognize such deferred tax
asset. Both situations would result in additional income tax expense for the period in which such determination is made. To determine whether it is
probable that deferred tax assets will ultimately be recovered, CEMEX, S.A.B. de C.V. takes into consideration all available positive and negative
evidence, including factors such as market conditions, industry analysis, expansion plans, projected taxable income, carryforward periods, current tax
structure, potential changes or adjustments in tax structure, tax planning strategies, future reversals of existing temporary differences. Likewise,
CEMEX, S.A.B. de C.V. analyzes its actual results versus the Parent Company’s estimates, and adjusts, as necessary, its tax asset valuations. If
actual results vary from CEMEX, S.A.B. de C.V.’s estimates, the deferred tax asset and/or valuations may be affected, and necessary adjustments
will be made based on relevant information in CEMEX, S.A.B. de C.V.’s statement of operations for such period.
Based on IFRIC 23, Uncertainty over income tax treatments (“IFRIC 23”), the income tax effects from an uncertain tax position are recognized when it is
probable that the position will be sustained based on its technical merits and assuming that the tax authorities will examine each position and have full
knowledge of all relevant information. For each position probability is considered individually, regardless of its relationship to any other broader tax
settlement. The probability threshold represents a positive assertion by management that CEMEX, S.A.B. de C.V. is entitled to the economic benefits of a
tax position. If a tax position is considered not probable of being sustained, no benefits of the position are recognized. Interest and penalties related to
unrecognized tax benefits are recorded as part of the income tax in the statements of operations.
The effective income tax rate is determined dividing the line item “Income tax” by the line item “Net income before income tax.” This effective tax rate
is further reconciled to CEMEX, S.A.B. de C.V.’s statutory tax rate applicable in Mexico (note 21).
3.13) STOCKHOLDERS’ EQUITY
Common stock and additional paid-in capital (note 22.1)
These items represent the value of stockholders’ contributions, and include increases related to the capitalization of retained earnings and the recognition
of executive compensation programs in CEMEX, S.A.B. de C.V.’s CPOs as well as decreases associated with the restitution of retained earnings.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
14
Other equity reserves and subordinated notes
(note 22.3)
Groups the cumulative effects of items and transactions that are, temporarily or permanently, recognized directly to stockholders’ equity, and includes
the comprehensive income, which reflects certain changes in stockholders’ equity that do not result from investments by owners and distributions to
owners.
Beginning in June 2021, this line item includes the balance of subordinated notes with no fixed maturity issued by CEMEX, S.A.B. de C.V. Considering
that CEMEX, S.A.B. de C.V.’s subordinated notes have no fixed maturity date, there is no contractual obligation for CEMEX, S.A.B. de C.V. to deliver
cash or any other financial assets, the payment of principal and interest may be deferred indefinitely at the sole discretion of CEMEX, S.A.B. de C.V.
and specific redemption events are fully under CEMEX, S.A.B. de C.V.’s control, under applicable IFRS, these subordinated notes issued by CEMEX,
S.A.B. de C.V. qualify as equity instruments and are classified within controlling interest stockholders’ equity.
The most significant items within “Other equity reserves and subordinated notes” during the reported periods are as follows:
Items of “Other equity reserves and subordinated notes” included within other comprehensive income (loss):
The effective portion of the valuation and liquidation effects from derivative instruments under cash flow hedging relationships, which are recorded
temporarily in stockholders’ equity (note 3.5);
Changes in fair value of other investments in strategic securities (note 3.5); and
Current and deferred income taxes during the period arising from items whose effects are directly recognized in stockholders’ equity.
Items of “Other equity reserves and subordinated notes” not included in comprehensive income (loss):
Effects attributable to controlling stockholders’ equity for financial instruments issued by consolidated subsidiaries that qualify for accounting
purposes as equity instruments, such as the interest expense paid on perpetual debentures;
The balance of subordinated notes with no fixed maturity and any interest accrued thereof; and
The cancellation of CEMEX, S.A.B. de C.V.’s shares held by consolidated entities.
Retained earnings (note 22.2)
Retained earnings represent the cumulative net results of prior years, net of: a) dividends declared; b) capitalization of retained earnings; c) restitution
of retained earnings when applicable; and d) cumulative effects from adoption of new IFRS.
3.14) REVENUE RECOGNITION (note 4)
Revenue is recognized at a point in time or over time in the amount of the price, before tax on sales, expected to be received for goods and services
supplied because of ordinary activities, as contractual performance obligations are fulfilled, and control of goods and services passes to the customer.
Revenues are decreased by any trade discounts or volume rebates granted to customers. Variable consideration is recognized when it is highly probable
that a significant reversal in the amount of cumulative revenue recognized for the contract will not occur and is measured using the expected value or
the most likely amount method, whichever is expected to better predict the amount based on the terms and conditions of the contract.
Revenue and costs from trading activities, in which CEMEX, S.A.B. de C.V. acquires finished goods from a third party and subsequently sells the
goods to another third-party, are recognized on a gross basis, considering that CEMEX, S.A.B. de C.V. assumes ownership risks on the goods purchased,
not acting as agent or broker.
Commencing August 2021, in connection with the corporate reorganization (notes 2 and 14.1), CEMEX, S.A.B. de C.V., recognizes revenue from
operating leases of some of its property, machinery, and equipment to CEMEX Operaciones México, S.A. de C.V., and CEMEX Concretos, S.A. de
C.V. subsidiaries of the Parent Company.
When revenue is earned over time as contractual performance obligations are satisfied, which is the case of construction contracts, CEMEX, S.A.B. de
C.V. applies the stage of completion method to measure revenue, which represents: a) the proportion that contract costs incurred for work performed
to date bear to the estimated total contract costs; b) the surveys of work performed; or c) the physical proportion of the contract work completed;
whichever better reflects the percentage of completion under the specific circumstances. Revenue related to such construction contracts is recognized
in the period in which the work is performed by reference to the contract’s stage of completion at the end of the period, considering that the following
have been defined: a) each party’s enforceable rights regarding the asset under construction; b) the consideration to be exchanged; c) the manner and
terms of settlement; d) actual costs incurred and contract costs required to complete the asset are effectively controlled; and e) it is probable that the
economic benefits associated with the contract will flow to the entity.
Progress payments and advances received from customers do not reflect the work performed and are recognized as short-term or long-term advanced
payments, as appropriate.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
15
3.15) COST OF SALES AND OPERATING EXPENSES
(notes 5 and 6)
Cost of sales represents the production cost of inventories at the moment of sale. Such cost of sales includes depreciation, amortization and depletion
of assets involved in production, expenses related to storage in production plants and freight expenses of raw material in plants and delivery expenses
of CEMEX, S.A.B. de C.V.’s ready-mix concrete business. Commencing August 2021, in connection with the corporate reorganization (notes 2 and
14.1), CEMEX, S.A.B. de C.V.’ cost of sales represents the acquisition cost of the products of the merchandising for CEMEX, S.A.B. de C.V. during
the period.
Administrative expenses represent the expenses associated with personnel, services and equipment, including depreciation and amortization, related to
managerial activities and back office for the Parent Company’s management. Sales expenses represent the expenses associated with personnel, services
and equipment, including depreciation and amortization, involved specifically in sales activities.
Distribution and logistics expenses refer to expenses
of storage at points of sales, including depreciation and amortization, as well as freight expenses of finished products between plants and points of sale
and freight expenses between points of sales and the customers’ facilities.
3.16) CONCENTRATION OF BUSINESS AND CREDIT
CEMEX, S.A.B. de C.V. sells its products primarily to distributors in the construction industry, with no specific geographic concentration within the
countries in which CEMEX, S.A.B. de C.V. operates. As of and for the years ended December 31, 2022, 2021 and 2020, no single customer individually
accounted for a significant portion of the reported amounts of sales or in the balances of trade receivables. In addition, there is no significant
concentration of a specific supplier relating to the purchase of raw materials.
3.17) NEWLY ISSUED IFRS NOT YET ADOPTED
There are several amendments or new IFRS issued but not yet effective which are under analysis by the Parent Company’s management and expected
to be adopted on their specific effective dates. The Parent Company’s management has preliminarily determined that these amendments and new IFRS,
summarized as follows, will have no significant effect on the Parent Company’s financial position or operating results:
Standard Main topic Effective date
Amendments to IAS 1, Presentation of
Financial Statements– Classification of
Liabilities as Current or Non-current ......
Clarifies the requirements to be applied in classifying liabilities as current and non-
current.
January 1, 2023
Amendments to IAS 8,Definition of
Accounting Estimates .............................
The amendment makes a distinction between how an entity should present and
disclose different types of accounting changes in its financial statements. Changes in
accounting policies must be applied retrospectively while changes in accounting
estimates are accounted for prospectively.
January 1, 2023
Amendments to IAS 1 and IFRS Practice
Statement 2,Disclosure of Accounting
Policies ...................................................
The amendment requires entities to disclose their material accounting policies rather
than their significant accounting policies. To support this amendment the Board has
also developed guidance and examples to explain and demonstrate the application of
the ‘four-step materiality process’ described in IFRS Practice Statement 2 Making
M
aterialit
y
Jud
g
ements to accountin
g
p
olic
y
disclosures.
January 1, 2023
Amendments to IAS 12, Income Taxes –
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction .............................................
The amendment clarifies that companies should account for deferred tax assets and
liabilities on transactions such as leases and decommissioning obligations. CEMEX
has always applied these criteria.
January 1, 2023
IFRS 17, Insurance Contracts .................. The new Standard establishes the principles for the recognition, measurement,
presentation and disclosure of insurance contracts and supersedes IFRS 4, Insurance
contracts. The Standard outlines a General Model, which is modified for insurance
contracts with direct participation features, described as the Variable Fee Approach.
The General Model is simplified if certain criteria are met by measuring the liability
for remaining coverage using the Premium Allocation Approach.
January 1, 2023
Amendments to IFRS 16, Leases – Lease
Liability in a Sale and Leaseback ..........
The amendments mentioned that on initial recognition, the seller-lessee would include
variable payments when it measures a lease liability arising from a sale-and-leaseback
transaction. In addition, the amendments established that the seller-lessee could not
recognize gains or losses relating to the right of use it retains after initial recognition.
January 1, 2024
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
16
4) REVENUES
CEMEX, S.A.B. de C.V.’s revenues are mainly originated from the sale and distribution of cement, ready-mix concrete, aggregates and other
construction materials and services, including urbanization solutions. CEMEX, S.A.B. de C.V. grants credit for terms ranging from 15 to 90 days
depending on the type and risk profile of each customer. For the years ended December 31, 2022, 2021 and 2020, revenues are as follows:
2022 2021 2020
From the sale of
g
oods related to
p
rinci
p
al activities ..................................................... $ 78,293 71,341 58,572
From the sale of other goods and services
1
(notes 2 and 14.1) .......................................
1,219 6,385 266
$ 79,512 77,726 58,838
In addition to revenues from sales, distribution and services related to the construction, the revenues from CEMEX, S.A.B. de C.V. activities as of
December 31, 2022, 2021 and 2020, included the following:
2022 2021 2020
Rental income
2
..................................................................................................................
$
6,165 1,429 61
License fees and administrative services ............................................................................ 3,189 834 711
$
9,354 2,263 772
1 For the year ended December 31, 2021, includes $3,521 in relation to the sale of inventory related to the corporate reorganization (note 2 and 14.1).
2 For the years ended December 31, 2022 and 2021, includes $5,787 and $1,118, respectively, in relation to operating leases related to the corporate reorganization
(notes 2, 14.1 and 16.2).
Under IFRS 15, certain promotions and/or discounts and rebates offered as part of the sale transaction, result in a portion of the transaction price being
allocated to such commercial incentives as separate performance obligations, recognized as contract liabilities with customers, and deferred to the
statement of operations during the period in which the incentive is exercised by the customer or until it expires.
For the years ended December 31, 2022, 2021 and 2020 changes in the balance of contract liabilities with customers are as follows:
2022 2021 2020
Opening balance of contract liabilities with customers ....................................................... $
364 359 292
Increase durin
g
the
p
eriod for new transactions ...........................................................
1,643
1,121 918
Decrease durin
g
the
p
eriod for exercise or ex
p
iration of incentives .............................
(1,602)
(
1,116
)
(
851
)
Closing balance of contract liabilities with customers ......................................................... $
405 364 359
For the years 2022, 2021 and 2020, CEMEX, S.A.B. de C.V. did not identify any costs required to be capitalized as contract fulfilment assets and
released over the contract life according to IFRS 15, Revenues from contracts with customers.
5) COST OF SALES
The detail of CEMEX, S.A.B. de C.V.’s cost of sales by nature for the years 2022, 2021 and 2020 is as follows:
2022 2021 2020
Raw materials and goods for sale (notes 2 and 14.1) ...........................................................
$
48,463 46,876 20,595
Payroll .................................................................................................................................
880 2,252 2,311
Electricity, fuels and other services (notes 2 and 14.1) ........................................................
3,822 2,821 5,224
Maintenance, repairs and supplies (notes 2 and 14.1) ..........................................................
222 1,609 2,293
Transportation costs .............................................................................................................
749 830 919
Depreciation and amortization .............................................................................................
1,794 206 2,065
Changes in inventory ...........................................................................................................
(
8
)
(
6,944
)
(
10,446
)
Other production costs .........................................................................................................
3,155 4,230 5,140
$ 59,077 51,880 28,101
CEMEX, S.A.B. de C.V., commencing August 1, 2021, is dedicated to marketing, selling, and distributing cement and ready-mix concrete. The cost
of sales recognized until that date before the reorganization was $19,552 (notes 2 and 14.1).
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
17
6) OPERATING EXPENSES
CEMEX, S.A.B. de C.V.’s operating expenses during 2022, 2021 and 2020 by function were as follows:
2022 2021 2020
Administrative ex
p
enses
(
notes 2 and 14.1
)
...........................................................................
$
5,824 3,134 8,397
Selling expenses .....................................................................................................................
2,016 1,726 1,747
Total administrative and sellin
g
ex
p
enses ........................................................................ 7,840 4,860 10,144
Distribution and logistics expenses ........................................................................................ 10,200 8,997 8,880
Total operating expenses ..................................................................................................
$
18,040 13,857 19,024
The decrease in operating expenses in 2021 compared to 2020, is mainly due to the corporate reorganization mentioned in notes 2 and 14.1.
CEMEX, S.A.B. de C.V.’s operating expenses during 2022, 2021 and 2020 by nature are as follows:
2022 2021 2020
Transportation costs ................................................................................................................... $ 8,797 3,747 9,449
Payroll ....................................................................................................................................... 3,709 2,785 1,983
Depreciation and amortization ...................................................................................................
579 76 332
Maintenance, repairs and supplies .............................................................................................
13 318 140
Professional legal, accounting and miscellaneous consulting services ......................................
4,371 5,677 5,351
Public services and office supplies ............................................................................................ 41 114 114
Insurances and sureties .............................................................................................................. 161 88 79
Expected credit losses on trade accounts receivable .................................................................. 34 3 143
Rental expenses ......................................................................................................................... 52 730 184
Other operating expenses ........................................................................................................... 283 319 1,249
$ 18,040 13,857 19,024
7) OTHER INCOME (EXPENSES), NET
The detail of the line item “Other income (expenses), net” in 2022, 2021 and 2020 was as follows:
2022 2021 2020
Results from the sale of assets ....................................................................................................
$
1 50 (6)
Incremental costs and expenses related to the COVID-19 Pandemic .........................................
–
(
78
)
(
602
)
Restructuring costs
1
...................................................................................................................
(341)
–
–
Provision related to electricity charges
2
.....................................................................................
(
667
)
–
–
Results from the sale of emission allowances .............................................................................
–
4,210
–
Miscellaneous fees and others .................................................................................................... 86 105
(
106
)
$
(921) 4,287 (714)
1 Restructuring costs mainly refer to extraordinary expenses related to the transfer of personnel from CEMEX Operaciones Mexico S.A de C.V, as mentioned in note
2 and severance payments and the definite closing of operating sites.
2 Refers to a provision recognized in 2022 as a result of a change in legislation that would require an additional payment in relation to electricity charges.
During the year ended December 31, 2021, CEMEX, S.A.B. de C.V. received proceeds of $12,508 from the sale of emission allowances, resulting in
a gain recognized in other income (expenses), net of $4,210. These emission allowances represent certificates issued by the member states of the
European Union, which grant the holder a right to emit a controlled amount of carbon dioxide during a specific period. CEMEX, S.A.B. de C.V.
recognizes these certificates at their acquisition cost.
8) FINANCIAL ITEMS
8.1) FINANCIAL EXPENSE
Financial expense in 2022, 2021 and 2020 includes $120, $167 and $219 of interest expense from financial obligations related to lease contracts (notes
16.2 and 18.2).
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
18
8.2) FINANCIAL INCOME AND OTHER ITEMS, NET
For the years ended December 31, 2022, 2021 and 2020, the detail of “Financial income and other items, net” was as follows:
2022 2021 2020
Financial income ........................................................................................................................
$
2,648 5,188 4,121
Results from financial instruments, net (notes 15 and 18.4) ...................................................... (103) (104) (355)
$
2,545 5,084 3,766
9) CASH AND CASH EQUIVALENTS
As of December 31, 2022 and 2021, cash and cash equivalents include cash and bank accounts of $2,652 and $4,556, respectively.
10) TRADE ACCOUNTS RECEIVABLE, NET
As of December 31, 2022 and 2021, trade accounts receivable, net consisted of:
2022 2021
Trade accounts receivable ......................................................................................................................................
$
4,517 3,927
Allowances for expected credit losses ....................................................................................................................
(274) (255)
$
4,243 3,672
As of December 31, 2022 and 2021, balances include receivables of $2,331 (US$120) and $2,023 (US$99), respectively, sold under outstanding
securitization programs and/or factoring programs with recourse established in Mexico, in which CEMEX, S.A.B. de C.V., effectively surrenders
control associated with the trade accounts receivable sold and there is no guarantee or obligation to reacquire the assets; nonetheless, in such programs,
CEMEX, S.A.B. de C.V., retains certain residual interest in the programs and/or maintains continuing involvement with the accounts receivable.
Therefore, the receivables sold were not removed from the statement of financial position and the amounts funded to CEMEX, S.A.B. de C.V. of
$1,782 in both years, were recognized within the line item “Other financial obligations”. Receivables qualifying for sale exclude amounts over certain
days past due or concentrations over certain limits by customer, according to the terms of the programs. The discount granted to the acquirers of the
trade receivables is recorded as financial expense and amounted to $189 (US$10) in 2022, $123 (US$6) in 2021 and $133 (US$7) in 2020. CEMEX,
S.A.B. de C.V.’s securitization programs are usually negotiated for periods of one to two years and are usually renewed at their maturity.
Allowances for doubtful accounts are determined and recognized upon origination of the trade accounts receivable based on an Expected Credit Loss
(“ECL”). For the years ended December 31, 2022, 2021 and 2020, the ECL on accounts receivable was $34, $3 and $143, respectively, which was
recognized as part of operating expense. Under this ECL model, CEMEX, S.A.B. de C.V. segments its accounts receivable in a matrix by type of client
or homogeneous credit risk and days past due and determines for each segment an average rate of ECL, considering actual credit loss experience over
the last 24 months and analyses of future delinquency, which is applied to the balance of the accounts receivable. Changes for the expected credit losses
in 2022, 2021 and 2020, were as follows:
2022 2021 2020
Allowances for expected credit losses at beginning of perio
d
.............................................
$
255 432 319
Char
g
ed to sellin
g
ex
p
enses .........................................................................................
33 3 143
Deductions ...................................................................................................................
(14) (180) (30)
Allowances for ex
p
ected credit losses at end of
p
erio
d
.......................................................
$
274 255 432
As of December 31, 2022, in relation to the COVID-19 Pandemic and the potential increase in expected credit losses on trade accounts receivable
associated with the remaining negative economic effects, CEMEX, S.A.B. de C.V. maintains continuous communication with its customers as part of
its collection management, in order to anticipate situations that could represent an extension in the portfolio’s recovery period or in some cases the risk
of non-recovery. As of this same date, CEMEX, S.A.B. de C.V. considers that these negative effects do not yet have a significant impact on the
estimates of expected credit losses and will continue to monitor the development of relevant events that may eventually have effect because of a
deepening or extension of the COVID-19 Pandemic.
11) OTHER ACCOUNTS RECEIVABLE
As of December 31, 2022 and 2021, the caption other accounts receivable, included the following:
2022 2021
Other refundable taxes ............................................................................................................................................
$
140 114
Derivative financial instruments
(
note 18.4
)
...........................................................................................................
583 775
N
on-trade accounts receivable
1
..............................................................................................................................
785 571
$
1,508 1,460
1 Non-trade accounts receivable are mainly attributable to the sale of assets.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
19
12) INVENTORIES
As of December 31, 2022 and 2021, the balances of inventories was summarized as follows:
2022 2021
Finished goods .......................................................................................................................................................
$
906 563
Materials and spare parts .......................................................................................................................................
212 62
Inventory in transit ................................................................................................................................................. 3 142
$
1,121 767
For the years ended December 31, 2022 and 2021, CEMEX, S.A.B. de C.V., recognized in the statement of operations, inventory obsolescence of $9
and $9, respectively.
13) OTHER CURRENT ASSETS
As of December 31, 2022 and 2021, other current assets consisted of:
2022 2021
Advance
p
a
y
ments ..................................................................................................................................................
$
294 226
Investment available for sale ..................................................................................................................................
237 204
$
531 430
14) CORPORATE REORGANIZATION AND EQUITY ACCOUNTED INVESTEES
14.1) CORPORATE REORGANIZATION
As mentioned in note 2, as of August 1, 2021, CEMEX, S.A.B. de C.V., transferred certain activities related to the production of cement, ready-mix
concrete, and aggregates to its subsidiaries CEMEX Operaciones México, S.A. de C.V. and CEMEX Concretos, S.A. de C.V. In addition, during 2022
and 2021, CEMEX, S.A.B. de C.V. entered into various transactions with CEMEX Operaciones México, S.A. de C.V. and CEMEX Concretos, S.A.
de C.V. consisting in the sale of inventories, fixed assets and leases.
As mentioned in note 2, CEMEX, S.A.B. de C.V., recognized assets and liabilities transfers at their book value. CEMEX, S.A.B. de C.V. accounted
for any of such differences in stockholders' equity. The most significant effects in the financial statements of CEMEX, S.A.B. de C.V. for the years
ended December 31, 2022 and 2021, are as follows:
2022
2021
Sale of inventories
(
note 12
)
........................................................................................................................................
$
–
3,521
Sale of property, machiner
y
and equipment, net (note 16) ........................................................................................... 407 59
Leasin
g
account receivables
(
note 19
)
.......................................................................................................................... 71 1,743
Other liabilities and employee benefits transferred (notes 17 and 20) .......................................................................... 722 273
14.2) EQUITY ACCOUNTED INVESTEES
As of December 31, 2022 and 2021 equity accounted investees, include the following:
Activit
y
Countr
y
%
2022 2021
CEMEX Trademarks Holding Ltd.
........................................ Holding Switzerlan
d
99.6
$
55,003 83,220
CEMEX O
p
eraciones México, S.A. de C.V. .......................... Administrative services Mexico 99.9
276,710 253,256
CAMCEM, S.A. de C.V. ....................................................... Cement Mexico 40.1
5,990 5,342
Other com
p
anies.....................................................................
–
–
–
17,826 20,607
$
355,529 362,425
Out of which:
Acquisition cost ......................................................................................................................................................
$
467,978 468,051
Equity method recognition .....................................................................................................................................
$
(112,449) (105,626)
On April 12, 2022, CEMEX, S.A.B. de C.V. acquired 98.0% % of the capital stock of Alliera S.A. de C.V. for $0.05. In addition, CEMEX, S.A.B. de
C.V. received on May 18, 2022, a dividend of $80 from CAMCEM, S.A. de C.V, reducing the investment in the associate.
On December 17, 2021, CEMEX, S.A.B. de C.V. acquired through its subsidiary Transenergy, Inc. 20% of its investment in Terminales Portuarias del
Pacífico, S.A.P.I. de C.V. for an amount of $168 (US$8). In addition, on December 10, 2021, CEMEX, S.A.B. de C.V. acquired 99.99% of the capital
stock of Broquers Ambiental, S.A. de C.V. for $195 (US$9).
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
20
Equity accounted investees – continued
On January 13, 2020, CEMEX Internacional, S.A. de C.V., one of CEMEX, S.A.B. de C.V.’s subsidiaries, decreed to grant dividends to its shareholders
for an amount of $2,670 to be distributed among the 187.25 million shares, corresponding to a dividend of $14.25901 Pesos per share. CEMEX, S.A.B.
de C.V. owns 99.99% of the shares of CEMEX Internacional, S.A. de C.V. In addition, CEMEX, S.A.B. de C.V. received on December 21, 2020, a
dividend of $6,494 from its subsidiary CEMEX Operaciones México, S.A. de C.V.
The combined condensed financial information presented below, refers only to CAMCEM and other minor equity accounted investees in which
CEMEX, S.A.B. de C.V., possess significant influence. For information regarding the financial position and statement of operations of CEMEX’s
subsidiaries, reference is made to the consolidated financial statements of CEMEX.
Combined condensed statement of financial position information of CEMEX, S.A.B. de C.V.’s equity accounted investees as of December 31, 2022
and 2021 is set forth below:
2022 2021
Current assets .......................................................................................................................................................
$
22,196 21,603
N
on-current assets ................................................................................................................................................
26,683 28,246
Total assets ..................................................................................................................................................... 48,879 49,849
Current liabilities ..................................................................................................................................................
5,077 7,829
N
on-current liabilities ........................................................................................................................................... 14,637 13,440
Total liabilities ................................................................................................................................................
19,714 21,269
Total net assets ...............................................................................................................................................
$
29,165 28,580
Combined selected information of the statement of operations of CEMEX, S.A.B. de C.V.’s equity accounted investees in 2022, 2021 and 2020 is set
forth below:
2022 2021 2020
Revenues ...................................................................................................................................
$
23,870 19,972 20,297
O
p
eratin
g
earnin
g
s ..................................................................................................................... 5,442 4,591 4,537
Income before income tax ......................................................................................................... 3,282 2,548 2,077
N
et income ................................................................................................................................ 1,937 1,448 1,401
15) OTHER INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE
As of December 31, 2022 and 2021, other investments and non-current accounts receivable included the following:
2022 2021
Investments at fair value with changes recognized through the statement of operations ........................................
$
121 132
N
on-current
p
ortion of valuation of derivative financial instruments
(
note 18.4
)
................................................... 1,103 495
Investments in strategic equity securities ............................................................................................................... 81 230
Extraction ri
g
hts ..................................................................................................................................................... 109 109
Other non-current investments ............................................................................................................................... 351 424
$
1,765 1,390
16) PROPERTY, MACHINERY AND EQUIPMENT, NET AND ASSETS FOR THE RIGHT-OF-USE, NET
As of December 31, 2022 and 2021, property, machinery and equipment, net and assets for the right-of-use, net were summarized as follows:
2022 2021
Property, machinery and equipment, net .................................................................................................................
$
50,215 48,644
Assets for the right-of-use, net ................................................................................................................................
1,184 1,020
$
51,399 49,664
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
21
16.1) PROPERTY, MACHINERY AND EQUIPMENT, NET
As of December 31, 2022 and 2021, the property, machinery and equipment, net balances and changes for the period for such caption, are as following:
1
As of December 31, 2022, and 2021, includes costs related to the construction of the kiln #2 in the Tepeaca cement plant in the Mexican state of Puebla for $8,351
and $7,976, respectively. The construction of this kiln is intended to increase installed capacity of the plant to 4 million tons per year.
2 In connection with the disposals, during 2022 and 2021, CEMEX, S.A.B. de C.V. sold some assets to related parties for an amount of $407 and $59, respectively,
related to the corporate reorganization (notes 2 and 14.1).
In connection with the corporate reorganization described in notes 2 and 14.1, CEMEX, S.A.B. de C.V. leased some of its property, machinery, and
equipment to CEMEX Operaciones México, S.A. de C.V., and CEMEX Concretos, S.A. de C.V. to achieve the transfer of the production processes.
According to IFRS 16, these leases qualify as an operating lease from the lessor's accounting. CEMEX, S.A.B. de C.V., kept its assets on the balance
sheet as an owned asset and recognizes depreciation expense over the asset's useful life. For the year ended December 31, 2022 and for the period of
August 1, 2021, to December 31, 2021, CEMEX, S.A.B. de C.V., recognized revenues for these leases for $5,787 and $1,118, respectively.
16.2) ASSETS FOR THE RIGHT-OF-USE, NET
As of December 31, 2022 and 2021, consolidated assets for the right-of-use, net and the changes in this caption, were as follows:
2022
Land and
quarries
Building
Machinery and
equipment
Investments in
Progress
1
Total
Cost at beginning of period ..........................................................
$
16,116 8,597 35,528 10,806 71,047
Accumulated depreciation ............................................................ (1,193) (3,080) (18,130)
–
(22,403)
Net book value at beginning of period ....................................................
14,923 5,517 17,398 10,806 48,644
Capital expenditures .....................................................................
60 175 2,817 4,118 7,170
Dis
p
osals and reclassifications
2
...................................................
(112)
(
4
)
(
615
)
(
3,043
)
(
3,774
)
De
p
reciation and de
p
letion for the
p
eriod ....................................
(160)
(
272
)
(
1,605
)
–
(
2,037
)
Forei
g
n currenc
y
translation effects ............................................. 170 42
–
–
212
Cost at end of period .................................................................... 16,234 8,810 37,730 11,881 74,655
Accumulated depreciation ............................................................ (1,353) (3,352) (19,735)
–
(24,440)
Net book value at end of period ...............................................................
$
14,881 5,458 17,995 11,881 50,215
!~
2021
Land and
quarries
Building
Machinery and
equipment
Investments in
Progress
1
Total
Cost at be
g
innin
g
of
p
eriod ..........................................................
$
14,785 8,070 34,261 9,537 66,653
Accumulated de
p
reciation ............................................................
(
1,050
)
(
2,756
)
(
16,576
)
–
(
20,382
)
Net book value at beginning of period ....................................................
13,735 5,314 17,685 9,537 46,271
Capital expenditures .....................................................................
39 160 1,574 3,031 4,804
Disposals and reclassifications
2
..................................................
(200)
(6) (307) (1,762) (2,275)
Depreciation and depletion for the period .................................... (143) (324) (1,554)
–
(2,021)
Foreign currency translation effects .............................................
1,492
373
–
–
1,865
Cost at end of
p
eriod .................................................................... 16,116 8,597 35,528 10,806 71,047
Accumulated de
p
reciation ............................................................
(
1,193
)
(
3,080
)
(
18,130
)
–
(
22,403
)
Net book value at end of period ...............................................................
$
14,923 5,517 17,398 10,806 48,644
2022
Land and
quarries
Buildings
Machinery and
equipment
Others
Total
Assets for the right-of-use at beginning of period ........... $ 124 281 2,173 131 2,709
Accumulated de
p
reciation and de
p
letion ..........................
(
15
)
(
142
)
(
1,460
)
(
72
)
(
1,689
)
Net book value at beginning of period .....................................
109 139 713 59 1,020
Additions ......................................................................... 78 120 408 140 746
Cancellations and remeasurements ................................... 3
–
(
249
)
–
(
246
)
Depreciation and depletion for the perio
d
......................... (74) (40) (198) (24) (336)
Assets for the right-of-use at end of period ...................... 205 401 2,332 271 3,209
Accumulated de
p
reciation and de
p
letion ..........................
(
89
)
(
182
)
(
1,658
)
(
96
)
(
2,025
)
Net book value at end of period .................................................
$ 116 219 674 175 1,184
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
22
Assets for the right-of-use, net – continued
For the year ended December 31, 2022 and 2021, the combined rental expense related with short-term leases, low-value leases and variable lease
payments were $48 and $32, respectively, and were recognized in cost of sales and operating expenses, as correspond.
Continuing with the corporate reorganization in 2021, CEMEX, S.A.B. de C.V., subleased some of the right-of-use contracts to CEMEX Operaciones
México, S.A. de C.V., and CEMEX Concretos, S.A. de C.V. On August 1, CEMEX, S.A.B. de C.V. transferred the risk and rewards associated with
the right-of-use contract to its mentioned subsidiaries for the entire term of the original lease contract. CEMEX, S.A.B. de C.V. derecognized $2,846
of right-of-use and recognized an account receivable for an amount of $1,578 with related parties (note 19.2).
17) OTHER CURRENT LIABILITIES
As of December 31, 2022 and 2021, other current liabilities are shown below:
2022 2021
Interest
p
a
y
able .......................................................................................................................................................
$
1,746 1,719
Advances from customers....................................................................................................................................... 2,983 2,256
Taxes
p
a
y
able ......................................................................................................................................................... 682 1,055
Provisions
1
............................................................................................................................................................. 3,028 1,627
Accounts
p
a
y
able an
d
accrued ex
p
enses ............................................................................................................... 1,100 332
Contract liabilities with customers (note 4) ............................................................................................................ 405 365
$
9,944 7,354
1
The caption refers primarily to services, insurance and fees.
18) FINANCIAL INSTRUMENTS
18.1) CURRENT AND NON-CURRENT DEBT
CEMEX, S.A.B. de C.V.’s debt summarized as of December 31, 2022 and 2021, by interest rates and currencies were as follows:
2022 2021
Current Non-current
Total
1
Current Non-current
Total
1
Floatin
g
rate debt .................
$
–
30,641 30,641
–
15,117 15,117
Fixed rate debt ......................
–
97,386 97,386
–
126,475 126,475
$
–
128,027 128,027
–
141,592 141,592
Effective rate 2
Floatin
g
rate .........................
–
4.6%
–
2.3%
Fixed rate .............................
–
5.2%
–
4.8%
2022 2021
Currency
Current Non-current Total
Effective
rate
2
Current Non-current Total
Effective
rate 2
Dollars ............................
$
–
104,137 104,137 5.6%
– 127,097 127,097 4.4%
Euros ..............................
–
18,688 18,688 3.3%
–
9,298 9,298 3.1%
Pesos ...............................
–
5,202 5,202 12.2%
–
5,197 5,197 7.2%
$
–
128,027 128,027
–
141,592 141,592
2021
Land and
quarries
Buildings
Machinery and
equipment
Others
Total
Assets for the right-of-use at beginning of period ........... $ 623 1,734 4,868 63 7,288
Accumulated de
p
reciation and de
p
letion ..........................
(
31
)
(
870
)
(
2,514
)
(
13
)
(
3,428
)
Net book value at beginning of period ......................................
592 864 2,354 50 3,860
Additions .........................................................................
67 18 285 68 438
Cancellations and remeasurements ...................................
(566) (1,471) (134) – (2,171)
Cancellations due to corporate reorganization (notes 2
and 14.1
)
...........................................................................
– – (2,846) – (2,846)
Depreciation and depletion for the perio
d
...................
16 728 1,054 (59) 1,739
Assets for the right-of-use at end of period ......................
124 281 2,173 131 2,709
Accumulated de
p
reciation and de
p
letion ..........................
(
15
)
(
142
)
(
1,460
)
(
72
)
(
1,689
)
Net book value at end of period .................................................
$ 109 139 713 59 1,020
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
23
Current and non-current debt – continued
1 As of December 31, 2022 and 2021, cumulative discounts, fees and other direct costs incurred in CEMEX, S.A.B. de C.V.’s outstanding debt borrowings and the
issuance of notes payable (jointly “Issuance Costs”) for US$
44 ($861) and US$53 ($1,094), respectively, are presented reducing debt balances and are amortized to
financial expense over the maturity of the related debt instruments under the effective interest rate method.
2 In 2022 and 2021, represents the weighted-average nominal interest rate of the related debt agreements determined at the end of each period.
2022
Current Non-current 2021 Current Non-current
Bank loans
Bank loans
Syndicated loans, 2024 to 2026 ...................
$
–
50,269
Syndicated loans, 2023 to 2026 ...............
$
–
35,431
–
50,269
–
35,431
Notes payable
Notes payable
Medium-term notes, 2024 to 2031 ..............
–
77,758
Medium-term notes, 2024 to 2031 ...........
–
106,161
–
77,758
–
106,161
Total bank loans and notes payable ............
–
128,027
Total bank loans and notes payable .........
–
141,592
Current maturities .......................................
–
–
Current maturities ....................................
–
–
$
–
128,027
$
–
141,592
Changes in debt for the years ended December 31, 2022, 2021 and 2020 were as follows:
2022 2021 2020
Debt at be
g
innin
g
of
y
ea
r
..................................................................................................
$
141,592 173,233 148,384
Proceeds from new debt instruments .............................................................................. 39,947 84,333 138,921
Debt re
p
a
y
ments ..........................................................................................................
(47,113) (119,222) (119,600)
Forei
g
n currenc
y
translation effects ................................................................................
(
6,399
)
3,248 5,528
Debt at end of
y
ea
r
...........................................................................................................
$
128,027 141,592 173,233
During 2022, CEMEX, S.A.B de C.V. closed a €500 3-year sustainability-linked term loan (the “Term Loan”), the proceeds of which were used to
repay other debt. The Term Loan was issued under CEMEX’s Sustainability-linked Financing Framework (the “Framework”), increasing the amount
of debt that is linked and aligned to the company’s strategy of CO
2
emissions reduction and its ultimate vision of a carbon-neutral economy. All
sustainability-linked loans issued under the Framework have the same metrics and adjustments to the interest rate margin.
As of December 31, 2022 and 2021, non-current notes payable for $77,758 and $106,161, respectively, are detailed as follows:
Balances as of December 31,
Description
1, 2
Date of
issuance Currenc
y
Principal
amount Rate
Maturity
date
Redeemed
amount 2
US$
Outstandin
g
amount 2
US$
2022 2021
July 2031 Notes
3
.......................................
12/Jan
/
21 Dolla
r
1,750 3.875% 11/Jul/31 (642) 1,108 $ 21,494 35,688
September 2030 Notes
3
............................
17/Sep/20 Dolla
r
1,000 5.20% 17/Sep/30 (283) 717 13,923 20,396
N
ovember 2029 Notes
3
............................
19/Nov/19 Dolla
r
1,000 5.45% 19/Nov/29 (247) 753 14,602 20,379
June 2027 Notes ........................................ 05/Jun/20 Dolla
r
1,000 7.375% 05/Jun/27
–
1,000 19,416 20,400
March 2026 Notes .................................... 19/Mar/19 Euro 400 3.125% 19/Mar/26
–
428 8,323 9,298
$ 77,758 106,161
1 As of December 31, 2021, after closing the 2021 Credit Agreement, these issued notes are fully and unconditionally guaranteed by CEMEX Concretos, S.A. de C.V.,
CEMEX Operaciones México, S.A. de C.V., Cemex Innovation Holding Ltd. and CEMEX Corp.
2 Presented net of all notes repurchased and held by CEMEX, S.A.B. de C.V.’s subsidiaries. As of December 31, 2022, all repurchased notes have been canceled.
3
During 2022, pursuant to tender offers and other market transactions, CEMEX, S.A.B de C.V. partially different series of its notes for an aggregate notional amount
of US$1,172. The difference between the amount paid for such notes and the notional amount redeemed, net of transactional costs, generated a repurchase gain of
US$104, recognized in the statement of operations for the year in the line item of “Financial income and other item, net.”
Non-current debt maturities as of December 31, 2022, were as follows:
2022
2024...............................................................................................................................................................................................
$
6,811
2025...............................................................................................................................................................................................
23,987
2026...............................................................................................................................................................................................
27,795
2027...............................................................................................................................................................................................
19,416
2028 and thereafte
r
....................................................................................................................................................................... .
50,018
$
128,027
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
24
Current and non-current debt – continued
As of December 31, 2022, CEMEX, S.A.B. de C.V. had the following lines of credit, of which, the only committed portion refers to the revolving
credit facility under the 2021 Credit Agreement, at annual interest rates ranging between 3.38% and 5.65%, depending on the negotiated currency:
Millions of U.S. Dollars Lines of credit Available
Other lines of credit from banks
1
....................................................................................................... US$ 556 356
Revolvin
g
credit facilit
y
2021 Credit A
g
reement .............................................................................. 1,750 1,450
US$ 2,306 1,806
1 Uncommitted amounts subject to the banks’ availability.
During 2022, 2021 and 2020, as a result of debt issuances, exchange offers and tender offers incurred to refinance, replace and/or repurchase existing
debt instruments, as applicable, CEMEX, S.A.B de C.V paid issuance costs as well as premiums and/or redemption costs for a total of US$48 ($932),
US$138 ($2,829) and US$72 ($1,439), respectively. Of these incurred issuance costs, US$5 ($90) in 2022, US$37 ($759) in 2021 and US$38 ($759)
in 2020, associated with the extinguished portion of the related debt, were recognized in the statement of operations in each year within “Financial
expense”. In addition, issuance costs pending for amortization related to extinguished debt instruments for US$6 ($116) in 2022, US$27 ($544) in 2021
and US$1 ($29) in 2020 were also recognized in the statement of operations of each year within “Financial expense”.
2021 Credit Agreement
On October 29, 2021, CEMEX, S.A.B. de C.V. closed a Dollar-denominated US$3,250 syndicated sustainability-linked credit agreement (the “2021
Credit Agreement”), which proceeds were mainly used to fully repay its previous 2017 Facilities Agreement. The 2021 Credit Agreement originally
consisted of a US$1,500 five-year amortizing term loan and a US$1,750 five-year committed Revolving Credit Facility (“RCF”). The 2021 Credit
Agreement, which was the first debt instrument issued by CEMEX, S.A.B de C.V. under the Sustainability-linked Financing Framework (the
“Framework”) aligned to CEMEX’s strategy of CO
2
emissions reduction and its ultimate vision of a carbon-neutral economy, resulted in a stronger
liquidity position for CEMEX, S.A.B de C.V. from a risk and credit rating perspective. As of December 31, 2022 and 2021, debt outstanding under the
2021 Credit Agreement amounted to US$1,800 and US$1,500, respectively, which includes amounts owed under the RCF of US$300 in 2022.
All tranches under the 2021 Credit Agreement include a margin over LIBOR
1
from 100 bps
1
to 175 bps, which is about 25 basis points lower on average
than that of the 2017 Facilities Agreement, depending on the ratio of debt to Operating EBITDA (“Consolidated Leverage Ratio”) ranging from less
than 2.25 times in the lower end to greater than 3.25 times in the higher end. In addition, the annual performance in respect to the three metrics
referenced in the Framework may result in a total adjustment of the interest rate margin of plus or minus 5 basis points, in line with other sustainability-
linked loans from investment grade rated borrowers. The 2021 Credit Agreement includes the Loan Market Association
1
replacement screen rate
provisions in anticipation of the discontinuation of LIBOR rates.
Moreover, on December 23, 2021, CEMEX, S.A.B de C.V. closed a Peso-denominated of $5,231 syndicated sustainability-linked credit agreement
(the “2021 Pesos Credit Agreement”), under terms substantially similar to those of the 2021 Credit Agreement. The 2021 Pesos Credit Agreement has
the same guarantor structure as the 2021 Credit Agreement. As of December 31, 2022 and 2021, debt outstanding under the 2021 Pesos Credit
Agreement amounted to $5,231 equivalent to US$268 and US$255, respectively.
The balance of debt under the 2021 Credit Agreement is guaranteed by CEMEX Concretos, S.A. de C.V., CEMEX Operaciones México, S.A. de C.V.,
Cemex Innovation Holding Ltd. and CEMEX Corp, same guarantor structure applicable in all senior notes.
Under the 2021 Credit Agreement, CEMEX, S.A.B. de C.V. has no limits or permitted baskets to incur capital expenditures, acquisitions, dividends,
share buybacks and sale of assets, among others, as long as certain limited circumstances, such as non-compliance with financial covenants or specific
fundamental changes, would not arise therefrom.
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. was in compliance with the limitations, restrictions and financial covenants contained in the
2021 Credit Agreement and in the 2021 Pesos Credit Agreement. CEMEX, S.A.B. de C.V. cannot assure that in the future it will be able to comply with
such limitations, restrictions and financial covenants, which non-compliance could result in an event of default, which could materially and adversely affect
CEMEX, S.A.B. de C.V.’s business and financial condition.
2017 Facilities Agreement
In July 2017, CEMEX, S.A.B de C.V. and certain subsidiaries entered into a multi-currency equivalent to US$4,050 at the origination date syndicated
facilities agreement (the “2017 Facilities Agreement”), which proceeds were used to repay the US$3,680 then outstanding under the former facilities
agreement and other debt. All tranches under the 2017 Facilities Agreement, which was outstanding until October 29, 2021, included a margin of
LIBOR or EURIBOR
2
from 125 bps to 475 bps, and TIIE
2
from 100 bps to 425 bps, depending on the Consolidated Leverage Ratio ranging from less
than 2.50 times in the lower end to greater than 6.00 times in the higher end.
1 The London Inter-Bank Offered Rate (“LIBOR”) represent the variable rate used in international markets for debt denominated in Dollars. As of December 31, 2022
and 2021, 3-Month LIBOR rate was 4.77% and 0.21%, respectively. The contraction “bps” means basis points. One hundred basis points equal 1%. See note 17.5 for
developments on the undergoing interest rate benchmark reform.
2 The Euro Inter-Bank Offered Rate (“EURIBOR”) represent the variable rate used in international markets for debt denominated in Euros. The Tasa de Interés
Interbancaria de Equilibrio (“TIIE”) is the variable rate used for debt denominated in Pesos. As of December 31, 2022 and 2021, 3-Month EURIBOR rate was 2.13%
and -0.57%, respectively. As of December 31, 2022 and 2021, 28-day TIIE rate was 10.77% and 5.72%, respectively.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
25
2017 Credit Agreement – continued
In the amendment process to the 2017 Facilities Agreement that became effective on October 13, 2020, among other aspects, CEMEX, S.A.B. de C.V.
negotiated modifications to the applicable financial covenants considering the adverse effects arising during the COVID-19 Pandemic in exchange of
a one-time fee of US$14 (35 bps), and agreed to certain temporary restrictions with respect to permitted capital expenditures, the extension of loans to
third parties, acquisitions and/or the use of proceeds from asset sales and fundraising activities, as well as the suspension of share repurchases whenever
and for as long as CEMEX, S.A.B. de C.V. failed to report a consolidated leverage ratio of 4.50 times or less.
During 2021 until October 29 and the years 2020 and 2019, under the 2017 Facilities Agreement, except when capital expenditures or acquisitions did
not exceed free cash flow generation or were funded with proceeds from equity issuances or asset disposals, CEMEX, S.A.B. de C.V. was required to:
a) not exceed an aggregate amount for capital expenditures of US$1,500 per year, excluding certain capital expenditures, joint venture investments and
acquisitions by CHP and its subsidiaries and CLH and its subsidiaries, which had a separate limit of US$500 (or its equivalent) each; and b) not exceed
the amount for permitted acquisitions and investments in joint ventures of US$400 per year.
Financial Covenants
Under the 2021 Credit Agreement, at the end of each quarter for each period of four consecutive quarters, CEMEX, S.A.B. de C.V. must comply with
a maximum Consolidated Leverage Ratio of 3.75 times throughout the life of the Credit Agreement, and a minimum ratio of Operating EBITDA to
interest expense (“Consolidated Coverage Ratio”) of 2.75 times. These financial ratios are calculated using the consolidated amounts under IFRS.
As of December, 2020, under the 2017 Facilities Agreement, CEMEX, S.A.B. de C.V. had to comply with a Consolidated Coverage Ratio equal or
greater than 1.75 times and a Consolidated Leverage Ratio equal or lower than 6.25 times.
Consolidated Leverage Ratio
Under the 2021 Credit Agreement, the ratio is calculated dividing “Consolidated Net Debt” by “Consolidated EBITDA” for the last twelve months
as of the calculation date. Consolidated Net Debt equals debt, as reported in the statement of financial position, net of cash and cash equivalents,
excluding any existing or future obligations under any securitization program, and any subordinated debt of CEMEX, S.A.B. de C.V., adjusted for
net mark-to-market of all derivative instruments, as applicable, among other adjustments including in relation for business acquisitions or disposals.
Under the 2017 Facilities Agreement, the ratio was calculated dividing “Funded Debt” by pro forma Operating EBITDA for the last twelve months
as of the calculation date including a permanent fixed adjustment from the adoption of IFRS 16. Funded Debt equals debt, as reported in the
statement of financial position, net of cash and cash equivalents, excluding components of liability of convertible subordinated notes, plus lease
liabilities, perpetual debentures and guarantees, plus or minus the fair value of derivative financial instruments, as applicable, among other
adjustments for business acquisitions or disposals.
Consolidated EBITDA: Under the 2021 Credit Agreement, represents Operating EBITDA for the last twelve months as of the calculation date, as
adjusted for any discontinued EBITDA, and solely for the purpose of calculating the Consolidated Leverage Ratio on a pro forma basis for any material
disposition and/or material acquisition.
Pro forma Operating EBITDA: Under the 2017 Facilities Agreement, represented Operating EBITDA for the last twelve months as of the calculation
date, after IFRS 16 effects, plus the portion of Operating EBITDA referring to such twelve-month period of any significant acquisition made in the
period before its consolidation in CEMEX, S.A.B. de C.V., minus Operating EBITDA referring to such twelve-month period of any significant disposal
that had already been liquidated.
Consolidated Coverage Ratio
Under the 2021 Credit Agreement, the ratio is calculated by dividing Consolidated EBITDA by the financial expense for the last twelve months as
of the calculation date.
Under the 2017 Facilities Agreement, the ratio was calculated by dividing pro forma Operating EBITDA by the financial expense for the last twelve
months as of the calculation date, both including IFRS 16 effects. Financial expense included coupons accrued on the perpetual debentures.
As of December 31, 2022, 2021 and 2020, under the 2021 Credit Agreement and the 2017 Facilities Agreement, as applicable, the main consolidated
financial ratios were as follows:
Consolidated financial ratios
Refers to the compliance limits and calculations that were
effective on each date
2022 2021 2020
Levera
g
e ratio ...................................................................................................
Limit
<=3.75 <=3.75 <=6.25
Calculation
2.84 2.73 4.07
Covera
g
e ratio
..................................................................................................
Limit
>=2.75 >=2.75 >=1.75
Calculation
6.27 5.99 3.82
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
26
Financial covenants – continued
CEMEX, S.A.B. de C.V.’s ability to comply with these ratios may be affected by economic conditions and volatility in foreign exchange rates, as
well as by overall conditions in the financial and capital markets.
CEMEX, S.A.B. de C.V. will classify all of its non-current debt as current debt if: 1) as of any measurement date CEMEX, S.A.B. de C.V. fails to
comply with the aforementioned financial ratios; or 2) the cross default clause that is part of the 2021 Credit Agreement is triggered by the provisions
contained therein; 3) as of any date prior to a subsequent measurement date CEMEX, S.A.B. de C.V. expects not to be in compliance with such financial
ratios in the absence of: a) amendments and/or waivers covering the next succeeding 12 months; b) high probability that the violation will be cured
during any agreed upon remediation period and be sustained for the next succeeding 12 months; and/or c) an agreement to refinance the relevant debt
on a long-term basis. As a result of such classification of debt as current for noncompliance with the agreed upon financial ratios or, in such event, the
absence of a waiver of compliance or a negotiation thereof, after certain procedures upon CEMEX, S.A.B. de C.V.’s lenders’ request, they would call
for the acceleration of payments due under the 2021 Credit Agreement. That scenario would have a material adverse effect on CEMEX, S.A.B. de
C.V.’s operating results, liquidity or financial position.
18.2) OTHER FINANCIAL OBLIGATIONS
Other financial obligations in the statement of financial position of CEMEX, S.A.B. de C.V. as of December 31, 2022 and 2021, are as follows:
2022 2021
Current Non-Current Total Current Non-Current Total
I. Leases ............................................................ $
716 1,412 2,128
$ 760 1,705 2,465
II. Liabilities secured with accounts receivable
1,782
–
1,782
1,782 – 1,782
$
2,498 1,412 3,910
$ 2,542 1,705 4,247
I. Leases (notes 3.1, 3.5, 3.8 and 16.2)
CEMEX, S.A.B. de C.V. has several operating and administrative assets under lease contracts (note 16.2). As mentioned in note 3.8, from January 1,
2019, CEMEX. S.A.B. de C.V. applied IFRS 16 modifying previous years. CEMEX, S.A.B. de C.V. applies the recognition exemption for short-term
leases and leases of low-value assets. Changes in the balance of lease financial liabilities during 2022, 2021 and 2020 were as follows:
2022 2021 2020
Lease financial liability at beginning of yea
r
.................................................................................... $ 2,465 3,321 3,490
Additions from new leases ............................................................................................................ 746 438 723
Reductions from payments ............................................................................................................ (853) (1,318) (904)
Effects from remeasurements of the liabilit
y
and cor
p
orate reor
g
anization
(
note 14.1
)
................
(
275
)
86
(
48
)
Foreign currency translation and accretion effects ........................................................................ 45 (62) 60
Lease financial liability at end of yea
r
.............................................................................................. $ 2,128 2,465 3,321
In 2021, the line-item reduction from payments includes the purchase of corporate buildings previously held under lease for an amount of $484.
As of December 31, 2022 the non-current lease financial liabilities are as follows:
Total
2024 ............................................................................................................................................................................................ $ 513
2025 ............................................................................................................................................................................................ 381
2026 ............................................................................................................................................................................................ 192
2027 ............................................................................................................................................................................................ 88
2028 and thereafte
r
..................................................................................................................................................................... 238
$
1,412
Total cash outflows for leases in 2022, 2021 and 2020, including the interest expense portion as disclosed at note 8.1, were $973, $1,484 and $1,123,
respectively. Future payments associated with these contracts are presented in notes 19.2 and 23.3.
II. Liabilities secured with accounts receivable
As mentioned in note 10, as of December 31, 2022 and 2021, the funded amounts of sale of trade accounts receivable under securitization programs
and/or factoring programs with recourse of $1,782, for both years, were recognized in “Other financial obligations” in the statement of financial position.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
27
18.3) FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial assets and liabilities
The book values of cash, trade receivables, other accounts receivable, trade payables, other accounts payable and accrued expenses, as well as current
debt, approximate their corresponding estimated fair values due to the revolving nature of these financial assets and liabilities in the short-term.
The estimated fair value of CEMEX, S.A.B. de C.V.´s non-current debt is level 1 and level 2 and is either based on estimated market prices for such
or similar instruments, considering interest rates currently available for CEMEX, S.A.B. de C.V. to negotiate debt with the same maturities, or
determined by discounting future cash flows using market-based interest rates currently available.
The fair values determined by CEMEX, S.A.B. de C.V. for its derivative financial instruments are level 2. There is no direct measure for the risk of
CEMEX, S.A.B. de C.V. or its counterparties in connection with such instruments. Therefore, the risk factors applied for CEMEX, S.A.B. de C.V.’s assets
and liabilities originated by the valuation of such derivatives were extrapolated from publicly available risk discounts for other public debt instruments of
CEMEX, S.A.B. de C.V. or of its counterparties.
The estimated fair value of derivative instruments fluctuates over time and is determined by measuring the effect of future relevant economic variables
according to the yield curves shown in the market as of the reporting date. These values should be analyzed in relation to the fair values of the underlying
transactions and as part of CEMEX, S.A.B. de C.V.’s overall exposure to fluctuations in interest rates and foreign exchange rates. The notional amounts
of derivative instruments do not represent amounts of cash exchanged by the parties, and consequently, there is no direct measure of CEMEX, S.A.B.
de C.V.’s exposure to the use of these derivatives. The amounts exchanged are determined based on the notional amounts and other terms included in
the derivative instruments.
As of December 31, 2022 and 2021, the carrying amounts of non-current financial assets and liabilities and their respective fair values were as follows:
2022
2021
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Financial assets
Investments available-fo
r
-sale
(
note 13
)
................................................................. $ 237 237 $ 204 204
Derivative financial instruments
(
note 18.4
)
. ........................................................ 1,103 1,103 495 495
$
1,340 1,340
$
699 699
Financial liabilities
Non-current debt
(
note 18.1
)
...................................................................................
$
128,027 120,204
$
141,592 147,865
Other financial obli
g
ations
(
note 18.2
)
....................................................................
1,412 1,016
1,705 1,462
Derivative financial instruments
(
note 18.4
)
...........................................................
32 32
620 620
Non-current accounts
p
a
y
able with related
p
arties
(
note 19.1
)
..............................
59 59
72 72
$ 129,530 121,311
$
143,989 150,019
18.4) DERIVATIVE FINANCIAL INSTRUMENTS
During the reported periods, in compliance with the guidelines established by its Risk Management Committee, the restrictions set forth by its debt
agreements and its hedging strategy (note 18.5), CEMEX, S.A.B. de C.V. held derivative instruments, with the objectives, as the case may be: a)
changing the risk profile or securing the price of fuels; b) foreign exchange hedging; c) hedging forecasted transactions; and d) other corporate purposes.
As of December 31, 2022 and 2021, the notional amounts and fair values of CEMEX, S.A.B. de C.V.’s derivative instruments were as follows:
2022 2021
Notional amount Fair value Notional amount Fair value
I. Net investment hedge ........................................................................ US$
837 (48)
1,511 3
II. Interest rate swa
p
s .............................................................................
1,018 54
1,005 (18)
III. Fuel price hedging ............................................................................
136 8
145 30
IV. Forei
g
n exchan
g
e o
p
tions .................................................................
500 18
250 6
US$
2,491 32
2,911 21
The caption “Financial income and other items, net” in the statement of operations includes gains and losses related to the recognition of changes in
fair values of the derivative financial instruments during the applicable period, which represented net losses of US$5 ($103) in 2022, of US$6 ($123)
in 2021 and of US$17 ($367) in 2020.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
28
Derivative financial instruments – continued
I. Net investment hedge
As of December 31, 2022 and 2021, there are Dollar/Peso foreign exchange forward contracts with target tenor ranging from 1 to 18 months for notional
amounts of US$738 and US$761, respectively. CEMEX, S.A.B. de C.V. has designated this program as a hedge of CEMEX, S.A.B. de C.V.'s net
investment in Pesos, pursuant to which changes in fair market value of these instruments are recognized as part of other comprehensive income in
equity. For the years 2022, 2021 and 2020, these contracts generated losses of US$96 ($1,924), losses of US$4 ($81) and gains of US$53 ($1,144),
respectively, which partially offset currency translation results in each year recognized in equity generated from CEMEX, S.A.B. de C.V.’s net assets
denominated in Pesos due to the appreciation of the Peso in 2022 and the depreciation of the Peso in 2021 and 2020.
In addition, as of December 31, 2022, as part of CEMEX S.A.B de C.V. Peso net investment hedge strategy, there are additional Dollar/Peso capped
forwards, structured with option contracts, for a notional amount of US$98 ($1,919). These capped forwards contain limits on the gain that the
instrument may generate. Any changes in fair market value of such capped forward contracts are also recognized as part of other comprehensive income
in equity. For the year 2022, these contracts generated losses of US$2 ($37), which partially offset currency translation results recognized in equity
generated from CEMEX S.A.B de C.V. net assets denominated in Pesos due to the appreciation of the Peso in 2022.
Moreover, as of December 31, 2021, CEMEX, S.A.B. de C.V. held Dollar/Euro cross-currency swap contracts for a notional amount of US$750, which
were entered into in November 2021. During the year 2022 CEMEX, S.A.B. de C.V. unwound these instruments fixing a settlement gain of US$80.
CEMEX, S.A.B. de C.V. designated the foreign exchange forward component of these instruments as a hedge of CEMEX, S.A.B. de C.V.'s net
investment in Euros, pursuant to which changes in fair market of such forward contracts were recognized as part of other comprehensive income in
equity, while changes in fair value of the interest rate swap component were recognized within the line of “financial income and other items, net.” For
the years 2022 and 2021, these contracts generated gains of US$70 ($1,400) and US$10 ($204) recognized in equity, which partially offset currency
translation results recognized in equity generated from CEMEX, S.A.B. de C.V.’s net assets denominated in Euros due to the depreciation of the Euro
in 2022 and 2021 against the Dollar, as well as gains of US$8 ($151) in 2022 and losses of US$1 ($20) in 2021 related to the exchange of interest rates
in the statement of operations.
II. Interest rate swap contracts
For accounting purposes under IFRS, CEMEX, S.A.B. de C.V. designates interest rate swaps as cash flow hedges, to fix interest rate payments in
relation to an equivalent amount of floating interest rate debt; therefore, changes in fair value of these contracts are initially recognized as part of other
comprehensive income in equity and are subsequently reclassified to financial expense as the interest expense of the related floating interest rate debt
is accrued in the statement of operations.
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. held interest rate swaps for a notional amount of US$750, in both periods, with a fair
market value representing assets of US$39 ($758) in 2022 and liabilities of US$30 ($615) in 2021, negotiated in June 2018 to fix interest payments of
existing bank loans bearing Dollar floating rates. During September 2020, CEMEX, S.A.B. de C.V. amended one of the interest rate swap contracts to
reduce the weighted average fixed rate from 3.05% to 2.56% in exchange of a payment of US$14 ($287), and in November 2021, CEMEX, S.A.B. de
C.V. unwound a portion of its interest rate swap in exchange of a payment of US$5 ($102), recognized within “Financial income and other items, net”
in the statement of operations.
In November 2021, these contracts were extended with a new maturity date in November 2026. For the years ended in 2022, 2021 and 2020, changes
in fair value of these contracts generated gains of US$69 ($1,382), gains of US$23 ($470) and losses of US$9 ($194), respectively, recognized in other
comprehensive income. Moreover, during the same periods, CEMEX, S.A.B. de C.V. recycled results from equity to the line item of “Financial
expenses” representing an expense of $2 ($39) in 2022, expense of $22 ($445) in 2021 and expense of $20 ($432) in 2020.
In addition, as of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. held interest rate swaps for a notional of US$268 and US$255, respectively,
negotiated to fix interest payments of existing bank loans referenced to Pesos floating rates maturing in November 2023, which fair value represented
an asset of US$15 ($287) in 2022 and of US$12 ($246) in 2021. During December 2021, CEMEX, S.A.B. de C.V. partially unwound its interest rate
swap receiving US$3 ($61) recognized within “Financial income and other items, net” in the statement of operations. CEMEX, S.A.B. de C.V.
designated these contracts as cash flow hedges, pursuant to which, changes in fair value are initially recognized as part of other comprehensive income
in equity and are subsequently allocated through financial expense as interest expense on the related bank loans is accrued. For the years ended
December 31, 2022, 2021 and 2020 changes in fair value of these contracts generated gains of US$3 ($59), gains of US$15 ($306) and losses of US$3
($65), respectively, recognized in other comprehensive income. Moreover, during the same periods, CEMEX, S.A.B. de C.V. recycled results from
equity to the line item of “Financial expenses” representing gains of $7 ($150) in 2022, expense of $0.3 ($5) in 2021 and expense of $0.1 ($2) in 2020.
In addition, as part of a forecasted debt issuance expected by mid-2023, during March 2022, CEMEX, S.A.B de C.V entered into interest rate swap
lock contracts for a notional of US$300. CEMEX, S.A.B de C.V designated these interest rate swap lock contracts as a cash flow hedge of the forecasted
debt transaction. During 2022, changes in fair value of these contracts generated gains of US$33 ($664), recognized in other comprehensive income.
During September 2022, CEMEX, S.A.B de C.V early settled these interest rate swap lock contracts and fixed the gain of US$33 ($664), which will
decrease the financial expense commencing when the debt is issued. Otherwise, the amount will remain in equity.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
29
Derivative financial instruments – continued
III. Fuel price hedging
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. maintained swap and option contracts negotiated to hedge the price of certain fuels,
primarily diesel and gas, in several operations for aggregate notional amounts of US$136 ($2,659) and US$145 ($2,973), respectively, with an estimated
aggregate fair value representing assets of US$8 ($159) in 2022 and of US$30 ($615) in 2021. By means of these contracts, for its own consumption
only, CEMEX, S.A.B. de C.V. either fixed the price of these fuels or entered into option contracts to limit the prices to be paid for these fuels, over
certain volumes representing a portion of the estimated consumption of such fuels in several operations. These contracts have been designated as cash
flow hedges of diesel or gas consumption, and as such, changes in fair value are recognized temporarily through other comprehensive income and are
recycled to operating expenses as the related fuel volumes are consumed. For the years 2022, 2021 and 2020, changes in fair value of these contracts
recognized in other comprehensive income represented losses of US$25 ($509), gains of US$22 ($449) and US$7 ($151), respectively. For these
derivative financial instruments CEMEX, S.A.B. de C.V. only acts as a financial intermediary for its subsidiaries, for such reason the accounting effects
for CEMEX, S.A.B. de C.V. in other comprehensive income are nullified.
IV. Foreign Exchange Options
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. held Dollar/Peso call spread option contracts for a notional amount of US$500 and
US$250, respectively. Such contracts mature between September 2024 and December 2024 and were negotiated to maintain the value in Dollars over
such notional amount over revenues generated in Pesos. Changes in the fair value of these instruments, generated losses of $US13 ($257) in 2022 and
losses of US$5 ($102) in 2021, recognized within “Financial income and other items, net” in the statement of operations.
Other derivative financial instruments negotiated during the periods
During 2020, CEMEX, S.A.B. de C.V. negotiated Dollar/Peso, Dollar/Euro and Dollar/British Pound foreign exchange forward contracts to sell Dollars
and Pesos and buy Euros and British Pounds, negotiated in connection with the voluntary prepayment and currency exchanges under the 2017 Facilities
Agreement, for a combined notional amount of US$397. For the year 2020, the aggregate results from positions entered and settled, generated losses
of US$15 recognized within “Financial income and other items, net” in the statements of operation. Additionally, during 2020, CEMEX, S.A.B. de
C.V. negotiated Dollar/Euro foreign exchange forward contracts to sell Dollars and buy Euros, negotiated in connection with the redemption of the
4.625% April 2024 Notes. For the year 2020, the aggregate results of these instruments from positions entered and settled, generated gains of US$3
($65), recognized within “Financial income and other items, net” in the statement of operations.
Moreover, in connection with the proceeds from the sale of certain assets in the United Kingdom, CEMEX, S.A.B. de C.V. negotiated British
Pound/Euro foreign exchange forward contracts to sell British Pounds and buy Euros for a notional amount of US$186 ($3,700). CEMEX, S.A.B. de
C.V. settled such derivatives on August 5, 2020. During the year 2020, changes in the fair value of these instruments and their settlement generated
gains of US$9 ($194) recognized within “Financial income and other items, net” in the statement of operations.
18.5) RISK MANAGEMENT
Enterprise risks may arise from any of the following situations: i) the potential change in the value of assets owned or reasonably anticipated to be
owned, ii) the potential change in value of liabilities incurred or reasonably anticipated to be incurred, iii) the potential change in value of services
provided, purchase or reasonably anticipated to be provided or purchased in the ordinary course of business, iv) the potential change in the value of
assets, services, inputs, products or commodities owned, produced, manufactured, processed, merchandised, leased or sell or reasonably anticipated to
be owned, produced, manufactured, processed, merchandised, leased or sold in the ordinary course of business, or v) any potential change in the value
arising from interest rate or foreign exchange rate exposures arising from current or anticipated assets or liabilities.
In the ordinary course of business, CEMEX, S.A.B. de C.V. is exposed to commodities risk, including the exposure from inputs such as fuel, coal,
petcoke, fly-ash, gypsum and other industrial materials which are commonly used by CEMEX, S.A.B. de C.V. in the production process, and expose
CEMEX, S.A.B. de C.V. to variations in prices of the underlying commodities. To manage this and other risks, such as credit risk, interest rate risk,
foreign exchange risk, equity risk and liquidity risk, considering the guidelines set forth by the Board of Directors, which represent CEMEX, S.A.B.
de C.V.’s risk management framework and that are supervised by several Committees, CEMEX, S.A.B. de C.V.’s management establishes specific
policies that determine strategies oriented to obtain natural hedges to the extent possible, such as avoiding customer concentration in a determined
market or aligning the currencies portfolio in which CEMEX, S.A.B. de C.V. incurred its debt with those in which CEMEX, S.A.B. de C.V. generates
its cash flows.
As of December 31, 2022 and 2021, these strategies are sometimes complemented with the use of derivative financial instruments as mentioned in
note 18.4, such as the commodity forward contracts on fuels negotiated to fix the price of these underlying commodities. The primary risk categories
are mentioned as follows.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates
which only affect CEMEX, S.A.B. de C.V.’s results if the fixed rate non-current debt is measured at fair value. All of our fixed-rate non-current debt
is carried at amortized cost and therefore is not subject to interest rate risk. CEMEX, S.A.B. de C.V.’s accounting exposure to the risk of changes in
market interest rates relates primarily to its non-current debt obligations with floating interest rates which, if such rates were to increase, may adversely
affect its financing cost and the results for the period.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
30
Interest rate risk – continued
Additionally, there is an opportunity cost for continuing to pay a determined fixed interest rate when the market rates have decreased and the entity
may obtain improved interest rate conditions in a new loan or debt issuance. CEMEX, S.A.B. de C.V. manages its interest rate risk by balancing its
exposure to fixed and floating rates while attempting to reduce its interest costs. CEMEX, S.A.B. de C.V. could renegotiate the conditions or repurchase
the debt, particularly when the net present value of the estimated future benefits from the interest rate reduction are expected to exceed the cost and
commissions that would have to be paid in such renegotiation or repurchase of debt.
As of December 31, 2022 and 2021, 24% and 11% of the non-current debt of CEMEX, S.A.B. de C.V. bears floating rates at a weighted average
interest rate of LIBOR plus 148 basis points and 150 basis points, respectively. These figures reflect the effect of interest rate swaps held by CEMEX
during 2022 and 2021. As of December 31, 2022 and 2021, if interest rates at that date had been 0.5% higher, with all other variables held constant,
the net income of CEMEX, S.A.B. de C.V. for 2022 and for 2021 would have decreased by US$12 ($243) and US$5 ($104), because of higher interest
expense on variable rate denominated debt. This analysis does not include the interest rate swaps held in 2021 and 2020.
Managing interest rate benchmark reform
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates
(IBORs) with alternative secured rates (referred to as the “IBOR reform”). CEMEX, S.A.B. de C.V. has exposures to IBORs on its financial instruments
that will be replaced or reformed as part of these market-wide initiatives. In anticipation of this transition, the 2021 Credit Agreement already
incorporates a benchmark rate replacement mechanism. Moreover, CEMEX, S.A.B. de C.V.’s derivative instrument contracts contain standard
definitions to incorporate robust fallbacks for instruments linked to certain IBORs, with the changes coming into effect from January, 2021. From that
date, all new cleared and non-cleared derivatives that reference such definitions include the fallbacks. As of December 31, 2022, with the exemption
of certain instrument that have migrated automatically to the alternative secured rates under the fallback protocol, CEMEX, S.A.B. de C.V. still has
derivatives instruments, when applicable, linked to LIBOR rates, such debt and derivative instruments will be orderly migrated to the alternative secured
rates in due course. CEMEX, S.A.B. de C.V. does not expect the migration spreads that may increase its financial expense to be significant.
CEMEX, S.A.B. de C.V.’s respective risk management committee monitors and manages the Company’s transition to alternative secured rates. The
committee evaluates the extent to which contracts reference IBOR cash flows, whether such contracts will need to be amended as a result of IBOR
reform and how to manage communication about IBOR reform with counterparties. The committee reports to the Parent Company’s Board of Directors
quarterly and collaborates with other business functions as needed. It provides periodic reports to management of interest rate risk and risks arising
from IBOR reform.
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates. CEMEX, S.A.B. de C.V.’s exposure to the risk of changes in foreign exchange rates relates primarily to its financing activities. As of December
31, 2022, 81% of the financial debt was Dollar-denominated, 15% was Euro-denominated, and 4% was Peso-denominated; therefore, CEMEX, S.A.B.
de C.V. had a foreign currency exposure arising from the Dollar-denominated financial debt, the Euro-denominated financial debt and the Pound-
denominated financial debt, versus the currency in which CEMEX, S.A.B. de C.V.’s revenues are settled. CEMEX, S.A.B. de C.V. cannot guarantee
that it will generate sufficient revenues in Dollars, Euro and Pounds from its operations to service these obligations. As of December 31, 2022, CEMEX,
S.A.B. de C.V. had implemented a derivative financing hedging strategy using foreign exchange options for a notional amount of US$500 to hedge the
value in Dollar terms of revenues generated in Pesos to partially address this foreign currency risk (note 18.4). Complementarily, CEMEX, S.A.B. de
C.V. may negotiate other derivative financing hedging strategies in the future if either of its debt portfolio currency mix, interest rate mix, market
conditions and/or expectations changes.
Monetary position by currency
As of December 31, 2022 and 2021, the net monetary assets (liabilities) by currency are as follows:
Current:
2022 2021
Monetar
y
assets .......................................................................................................................................................
$
11,910 11,806
Monetar
y
liabilities..................................................................................................................................................
(
85,004
)
(
76,648
)
Net monetar
y
liabilities ...................................................................................................................................
$
(73,094) (64,842)
Non-current:
Monetar
y
assets .......................................................................................................................................................
$
2,442 2,436
Monetar
y
liabilities..................................................................................................................................................
(132,625) (148,991)
Net monetar
y
liabilities ...................................................................................................................................
$
(130,183) (146,555)
Out of which:
Dollars .....................................................................................................................................................................
(
141,112
)
(
165,768
)
Pesos ........................................................................................................................................................................
(
43,279
)
(
36,266
)
Euros .......................................................................................................................................................................
(
18,886
)
(
9,363
)
$
(
203,277
)
(
211,397
)
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
31
Monetary position by currency – continued
Considering that the Parent Company’s functional currency for all assets, liabilities and transactions related to its financial and holding company
activities is the Dollar (note 3.3), there is foreign currency risk associated with the translation into Dollars of subsidiaries’ net assets denominated in
other currencies. When the Dollar appreciates, the value of such net assets denominated in other currencies decreases in Dollar terms, generating
negative foreign currency translation and reducing stockholders’ equity. Conversely, when the Dollar depreciates, the value of such net assets
denominated in other currencies increase in Dollar terms generating the opposite effect. CEMEX, S.A.B. de C.V. has implemented a Dollar/Peso
foreign exchange forward contracts program to hedge foreign currency translation in connection with its net assets denominated in Pesos (note 18.4).
Credit risk
Credit risk is the risk of financial loss faced by CEMEX, S.A.B. de C.V. if a customer or counterpart of a financial instrument does not meet its
contractual obligations and originates mainly from trade accounts receivable. As of December 31, 2022 and 2021, the maximum exposure to credit risk
is represented by the balance of financial assets. Management has developed policies for the authorization of credit to customers. The accounting
exposure to credit risk is monitored constantly according to the payment behavior of the debtors. Credit is assigned on a customer-by-customer basis
and is subject to assessments which consider the customers’ payment capacity, as well as past behavior regarding due dates, balances past due and
delinquent accounts. In cases deemed necessary, CEMEX, S.A.B. de C.V.’s management requires guarantees from its customers and financial
counterparties regarding financial assets.
The Company’s management has established a policy of low risk tolerance which analyzes the creditworthiness of each new client individually before
offering the general conditions of payment terms and delivery. The review includes external ratings, when references are available, and in some cases
bank references. Thresholds of purchase limits are established for each client, which represent the maximum purchase amounts that require different
levels of approval. Customers that do not meet the levels of solvency requirements imposed by CEMEX, S.A.B. de C.V. can only carry out transactions
by paying cash in advance. As of December 31, 2022, considering CEMEX, S.A.B. de C.V.'s best estimate of potential expected losses based on the
ECL model developed by CEMEX, S.A.B. de C.V. (note 10), the allowance for expected credit losses was $274.
The aging of trade accounts receivable as of December 31, 2022 is as follows:
2022
N
either
p
ast due, nor im
p
aired
p
ortfolio ..........................................................................................................................................
$
4,035
Past due less than 90 da
y
s
p
ortfolio ................................................................................................................................................. 117
Past due more than 90 da
y
s
p
ortfolio ............................................................................................................................................... 365
$
4
,
517
Liquidity risk
Liquidity risk is the risk that CEMEX, S.A.B. de C.V. will not have sufficient funds available to meet its obligations. In addition to cash flows provided
by its operating activities, to meet CEMEX, S.A.B. de C.V.’s overall liquidity needs for operations, servicing debt and funding capital expenditures
and acquisitions, CEMEX, S.A.B. de C.V. relies on cost-cutting and operating improvements to optimize capacity utilization and maximize
profitability, as well as borrowing under credit facilities, proceeds of debt and equity offerings, and proceeds from asset sales. CEMEX, S.A.B. de C.V.
is exposed to risks from changes in foreign currency exchange rates, prices and currency controls, interest rates, inflation, governmental spending,
social instability and other political, economic and/or social developments, any one of which may materially affect CEMEX, S.A.B. de C.V.’s results
and reduce cash from operations. The maturities of CEMEX, S.A.B. de C.V.’s contractual obligations are included in note 22.4.
As of December 31, 2022, current liabilities, which include $65,599 of current accounts payable to related parties, exceed current assets by $71,973. It
is noted that as part of its operating strategy implemented by management, the Company operates with a negative working capital balance. For the year
ended December 31, 2022, CEMEX, S.A.B. de C.V. generated cash flows provided by operating activities of $12,773. CEMEX, S.A.B. de C.V.’s
management considers that it will generate sufficient cash flows from operations in the following twelve months to meet its current obligations and is
confident in its proven capacity to continually refinance and replace its current obligations, which will enable CEMEX, S.A.B. de C.V. to meet any
liquidity risk in the short-term. In addition, as of December 31, 2022, CEMEX, S.A.B. de C.V. has committed lines of credit under the revolving credit
facility in its 2021 Credit Agreement for a total amount of US$1,750. As of December 31, 2022, the disposed amount is US$300.
As of December 31, 2022 and 2021, the potential requirement for additional margin calls under our different commitments is not significant.
As of December 31, 2022, in connection with the aggregate balance of current liabilities with related parties of $65,599, which refer primarily to
CEMEX Innovation Holding Ltd, CEMEX Operaciones Mexico, S.A. de C.V., CEMEX Transporte, S.A. de C.V. and CEMEX Concretos, S.A. de
C.V. (note 19.1), CEMEX, S.A.B. de C.V. has proven successful in refinancing such liabilities, given that it has control over its subsidiaries.
Equity risk
Equity risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market price of CEMEX,
S.A.B. de C.V.’s and/or third party’s shares. As described in note 18.4, considering specific objectives, CEMEX, S.A.B. de C.V. has negotiated equity
forward contracts on third-party shares. Under these equity derivative instruments, there is a direct relationship from the change in the fair value of the
derivative with the change in price of the underlying share. All changes in fair value of such derivative instruments are recognized in the income statement
as part of “Financial income and other items, net.” During the reported periods effects were not significant. As of December 31, 2022, CEMEX, S.A.B. de
C.V. does not have derivative financial instruments based on the price of the Parent Company’s shares or any third-party’s shares.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
32
19) BALANCES AND TRANSACTIONS WITH RELATED PARTIES
19.1) ACCOUNTS RECEIVABLE AND PAYABLE WITH RELATED PARTIES
Balances and transactions between CEMEX, S.A.B. de C.V. and its subsidiaries and equity accounted investees result primarily from: (i) businesses
and operational activities in Mexico; (ii) the acquisition or sale of shares of subsidiaries within the group; (iii) products purchase and sale, billing of
administrative services, rents, rights to use brands and commercial names, royalties and other services rendered between affiliated companies; and (iv)
loans with subsidiaries and equity accounted investees. When market prices and/or market conditions are not readily available, CEMEX, S.A.B. de
C.V. conducts transfer pricing studies to assure compliance with regulations applicable to transactions between related parties.
As of December 31, 2022 and 2021, the primary accounts receivable and payable with related parties, are the following:
Assets Liabilities
2022
Current Non-current Current Non-current
CEMEX Innovation Holdin
g
Lt
d
..........................................
$
–
–
31,194
–
CEMEX Operaciones México, S.A. de C.V. .........................
–
133 16,264
–
Siner
g
ía De
p
ortiva, S.A. de C.V. .......................................... 1,254
–
–
–
Especialistas en Corredores Viales,
S.A. de C.V. ................... 560
–
–
–
Reservas
Ecoló
g
icas Sustentables de la La
g
una, S.A. de C.V. 198
–
–
–
CEMEX Cor
p
. ....................................................................... 314
–
–
–
CEMEX Internacional, S.A. de C.V. .....................................
–
–
549 59
CEMEX Trans
p
orte, S.A. de C.V. ........................................
–
–
2,014
–
CEMEX Concretos, S.A. de C.V. .........................................
–
544 12,194
–
Others .................................................................................... 650
–
3,384
–
$
2,976 677 65,599 59
Assets Liabilities
2021
Current Non-current Current Non-current
CEMEX Innovation Holdin
g
Lt
d
..........................................
$
–
–
35,831
–
CEMEX Operaciones México, S.A. de C.V. .........................
–
214 7,394
–
Siner
g
ía De
p
ortiva, S.A. de C.V. .......................................... 588
–
–
–
Especialistas en Corredores Viales,
S.A. de C.V. ................... 507
–
–
–
Reservas
Ecoló
g
icas Sustentables de la La
g
una, S.A. de C.V. 180
–
–
–
CEMEX Internacional, S.A. de C.V. .....................................
–
–
–
41
CEMEX Trans
p
orte, S.A. de C.V. ........................................
–
–
1,956
–
CEMEX Concretos, S.A. de C.V. .........................................
–
832 9,538
–
Others .................................................................................... 413
–
4,871 31
$
1,688 1,046 59,590 72
19.2) PRINCIPAL OPERATIONS WITH RELATED PARTIES
The principal operations of CEMEX, S.A.B. de C.V. with related parties for the years ended December 31, 2022, 2021 and 2020, were as follows:
2022 2021 2020
Revenues:
Net sales
(
note 2
)
........................................................................................................................
$
20,578 19,810 5,985
Rental income (notes 2, 4 and 16.2) ............................................................................................
6,165 1,429 61
License fees and administrative services
(
note 2 and 4
)
..............................................................
3,189 834 711
Cost of sales and operating expenses:
Raw material, finished
g
oods and other
p
roduction cost
(
note 2
)
...............................................
35,753 25,202 2,935
Management service expenses ....................................................................................................
1,568 524 6,098
Lease ex
p
ense
(
note 16.2
)
...........................................................................................................
–
592 178
Financing cost (income):
Financial ex
p
enses ......................................................................................................................
3,558 1,809 1,937
Financial income and other items, net .........................................................................................
2,492 4,903 4,416
As of December 31, 2022, in connection with the operating lease agreements that CEMEX, S.A.B. de C.V. holds with related parties (note 16.2), the
cash flows to be received in the following years are detailed as follows:
(Millions of U.S. Dollars) 2022
Obligations
Less than 1
year
1-3
Years
3-5
Years
More than
5 Years Total
Operating leases to be received with related parties 1 ..
US$ 132 395 395 209 1,131
$ 2,574 7,703 7,703 4,076 22,056
1
The amounts represent nominal cash flows.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
33
Principal operations with related parties – continued
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V. had lease payable with related parties for US$4 ($75) and US$3 ($62), respectively.
As of December 31, 2022, in relation to the rights of use that CEMEX, S.A.B. de C.V. sublease to related parties described in note 16.2, below are the
nominal flows to be received in the following years:
(Millions of U.S. Dollars)
2023 2024 2025 2026 - 2031 Total
CEMEX Operaciones México, S.A, de C.V. ...................................
US$ 7 4 2 1 14
CEMEX Concretos, S.A, de C.V. ....................................................
14 12 9 7 42
US$ 21 16 11 8 56
$ 410 312 215 156 1,093
In addition, for the years 2022, 2021 and 2020, in the ordinary course of business, the Parent Company has entered into transactions with related parties
for the sale and/or purchase of products, sale and/or purchase of services or the lease of assets, all of which are not significant and to the best of the
Parent Company’s knowledge are not significant to the related party, are incurred for non-significant amounts and are executed following the same
authorizations applied to other third parties. The identified transactions, which involved members of the Parent Company’s Board of Directors and
senior management, as applicable, are reviewed by the Parent Company’s Board of Directors Corporate Practices and Finance Committee and approved
or ratified at least annually by the Parent Company’s Board of Directors. The Parent Company, also, enters into transactions with affiliates it indirectly
controls, such as Trinidad Cement Limited, Caribbean Cement Company Limited, CLH and CLH’s consolidated companies, and CHP and CHP’s
consolidated entities; with other companies in which CEMEX has a non-controlling position, such as GCC, Lehigh White Cement Company and
Neoris; with companies in which the Parent Company’s Board of Director members are members of such company’s board of directors, like FEMSA,
S.A.B. de C.V., Carza, S.A.P.I. de C.V., Nemak, S.A.B. de C.V., NEG Natural, S.A. de C.V.; and with companies at which members of CEMEX’s
senior management have family members, such as HSBC, and Cementos Españoles de Bombeo, S. de R.L. de C.V., all of which are also reviewed by
the Parent Company’s Board of Directors Corporate Practices and Finance Committee and approved or ratified at least annually by the Parent
Company’s Board of Directors. For CEMEX, none of these transactions are material to be disclosed separately.
20) PENSIONS AND POST-EMPLOYMENT BENEFITS
During August 2021, CEMEX, S.A.B. de C.V., acquired the rights and obligations of a group of employees that were transferred from several
subsidiaries to the Parent Company, due to a new labor reform in Mexico (Outsourcing Reform), which came into effect in September 2021. In addition,
on January 1, 2022, a group of employees were transferred from CEMEX Operaciones Mexico, S.A. de C.V., a subsidiary of CEMEX, S.A.B. de C.V.
(note 2)
Defined contribution pension plans
The costs of defined contribution plan for the years ended December 31, 2022 and 2021 were $279 and $157, respectively. CEMEX, S.A.B. de C.V.
contributes periodically the amounts offered by the pension plan to the employee’s individual accounts, not retaining any remaining liability as of the
financial statements’ date.
Defined benefit pension plans
CEMEX, S.A.B. de C.V. defined benefit plans is closed to new participants. Actuarial results related to pension and other post-employment benefits
are recognized in earnings and/or in “Other comprehensive income” for the period in which they are generated, as appropriate. For the years ended
December 31, 2022 and 2021, the effects of pension plans and other post-employment benefits are summarized as follows:
Pensions Other benefits Total
Net periodic cost:
2022 2021 2022 2021 2022 2021
Recorded in operating costs and expenses
Service cost .........................................................................................
$ 2 1 9
4 11 5
Past service cost ..................................................................................
1
–
–
–
1
–
3 1 9
4 12 5
Recorded in other financial expenses
N
et interest cost ..................................................................................
3 1 9
3 12 4
Recorded in other comprehensive income
Actuarial losses for the perio
d
.............................................................
33 2 0
7 33 9
$ 39 4 18
14 57 18
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
34
Pensions and post-employment benefits – continued
As of December 31, 2022 and 2021, the reconciliation of the actuarial benefits’ obligations and pension plan assets, are presented as follows:
Pensions Other benefits Total
2022 2021 2022 2021 2022 2021
Change in benefits obligation:
Pro
j
ected benefit obli
g
ation at be
g
innin
g
of the
p
erio
d
.........
$
29
–
90
–
119
–
Service cost ............................................................................
2 1 9 4 11 5
Interest cost ............................................................................ 3 1 9 3 12 4
Actuarial (gains) losses ........................................................... 33 2
–
7 33 9
Plan amendments ................................................................... 1
–
–
–
1
–
Benefits paid .......................................................................... (2)
–
(4)
–
(6)
–
Em
p
lo
y
ees transfer from subsidiaries .................................... 341 25 46 76 387 101
N
et projected liability in the statement of financial position ..
$
407 29 150 90 557 119
For the years 2022 and 2021, actuarial (gains) losses for the period were generated by the following main factors as follows:
2022 2021
Actuarial (gains) losses due to experience ............................................................................................... $ 9 19
Actuarial
(g
ains
)
losses due to demo
g
ra
p
hic assum
p
tions ....................................................................... 59
–
Actuarial (gains) losses due financial assumptions .................................................................................. (35) (10)
$ 33 9
In 2022, net actuarial losses due to demographic assumptions resulted from a change in life expectancy and the ongoing update of the mortality table.
In addition, the gain in financial assumptions was mainly driven by an increase in the discount rate applicable to the calculation of the benefits’
obligations, as market interest rates increased in 2022 as compared to 2021.
In 2021, the net actuarial losses due to experience was partially offset by gains in financial assumptions that were mainly driven by moderate increases
in the discount rate applicable to the calculation of the benefits’ obligations as market interest rates increased in 2021 as compared to 2020.
The most significant assumptions used in the determination of the benefit obligation were as follows:
2022 2021
Discount rates ....................................................................................................................................
10.50% 9.25%
Rate of return on plan assets .............................................................................................................. 10.50% 9.25%
Rate of salary increases ..................................................................................................................... 4.50% 4.00%
As of December 31, 2022, estimated payments for pensions and other post-employment benefits over the next 10 years were as follows:
Estimated
payments
2023 .............................................................................................................................................................................................. $ 33
2024 ..............................................................................................................................................................................................
29
2025 ..............................................................................................................................................................................................
28
2026 ..............................................................................................................................................................................................
27
2027 – 2032 ...................................................................................................................................................................................
140
CEMEX, S.A.B. de C.V. has established health care benefits for retired personnel limited to a certain number of years after retirement. As of December
31, 2022 and 2021, the projected benefits obligation related to these benefits was $61 and $30, respectively, included within other benefits liability.
The medical inflation rates used to determine the projected benefits obligation of these benefits in 2022 and 2021 7% in both years.
Sensitivity analysis of pension and other post-employment benefits
For the year ended December 31, 2022, CEMEX, S.A.B. de C.V. performed sensitivity analyses on the most significant assumptions that affect the
PBO, considering reasonable independent changes of plus or minus 50 basis points in each of these assumptions. The increase (decrease) that would
have resulted in the PBO of pensions and other post-employment benefits as of December 31, 2022 are shown below:
Pensions Other benefits Total
A
ssumptions:
+50 bps -50 bps +50 bps -50 bps +50 bps -50 bps
Discount Rate Sensitivity .................
$ (12) 13 (5) 5 (17) 18
Salary Increase Rate Sensitivity .......
–
–
(4) (5) (4) (5)
Inflation Rate Sensitivity ..................
–
–
(140) (139) (140) (139)
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
35
21) INCOME TAXES
21.1) INCOME TAXES FOR THE PERIOD
The amounts of income tax (expense) benefit in the statements of operations for 2022, 2021 and 2020 are summarized as follows:
2022 2021 2020
Current income tax expense ......................................................................................................
$
(91) (240) (135)
Deferred income tax (expense)
b
enefit ..................................................................................... 1,240 512 (82)
$
1,149 272
(
217
)
As of December 31, 2022, tax loss and tax credit carryforwards expire as follows:
Amount of
carryforwards
2030 and thereafte
r
...............................................................................................................................................
$
549
In December 2013, the Mexican Congress approved amendments to the income tax law effective January 1, 2014, which eliminated the tax
consolidation regime. A period of up to 10 years was established for the settlement of any liability for income taxes related to the tax consolidation
regime accrued until December 31, 2013, amount which considering the rules issued for the elimination of the tax consolidation regime amounted to
$24,804. As of December 31, 2022 and 2021, considering payments made during these years net of inflation adjustments, CEMEX, S.A.B. de C.V.
reduced the balance payable to $125 and $248, respectively.
21.2) DEFERRED INCOME TAXES
The effect of deferred income taxes for the period represents the difference between the income tax balances at the beginning and end of the period.
As of December 31, 2022 and 2021 the temporary differences that generated the deferred income tax assets and liabilities of CEMEX, S.A.B. de C.V.
are presented below:
2022 2021
Deferred tax assets:
Allowances for ex
p
ected credit losses .................................................................................................................
$
82 76
Provisions ...........................................................................................................................................................
1,184 706
Advances from customers ...................................................................................................................................
1,062 972
Tax loss to be amortize
d
......................................................................................................................................
165
–
Liabilities for the
r
i
g
ht-of-use
(
note 16.2
)
..........................................................................................................
628 729
Derivative financial instruments .........................................................................................................................
1,327 804
Others deferred tax assets ....................................................................................................................................
27
59
Total deferred tax assets ..................................................................................................................................
4,475 3,346
Deferred tax liabilities:
Land and buildings ..............................................................................................................................................
(5,417) (6,159)
Assets for the ri
g
ht-of-use
(
note 16.2
)
.................................................................................................................
(
355
)
(
306
)
Accounts receiva
b
le to related
p
arties .................................................................................................................
(
250
)
(
382
)
Advance
p
a
y
ments ..............................................................................................................................................
(
121
)
(
54
)
Total deferred tax liabilities .............................................................................................................................
(6,143) (6,901)
Net deferred tax liabilities ............................................................................................................................
$
(1,668) (3,555)
CEMEX, S.A.B. de C.V. does not recognize a deferred tax liability for the undistributed earnings generated by its subsidiaries, considering that such
undistributed earnings are expected to be reinvested and not generate taxable income in the near future. In addition, for the year ended December 31,
2022 and 2021, CEMEX, S.A.B. de C.V. recognized an income tax gain within other comprehensive income of $519 and an income tax gain of $48,
respectively, mainly related to the net investment hedge (note 18.4).
21.3) RECONCILIATION OF EFFECTIVE INCOME TAX RATE
For the years ended December 31, 2022, 2021 and 2020, the effective income tax rates were as follows:
2022 2021 2020
N
et income
b
efore income tax
....................................................................................................
$
16,192 14,912
(
32,345
)
Income tax ................................................................................................................................... 1,149 272 (217)
Effective income tax rate
1
........................................................................................................... 7.0 % 1.8 % 0.7 %
1 The average effective tax rate equals the net amount of income tax benefit or expense divided by net income before income taxes, as these line items are reported in
the statement of operations.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
36
Reconciliation of effective income tax rate – continued
The effects of inflation are recognized differently for tax purposes and for book purposes. This situation, which creates differences between book and
tax bases, gives rise to permanent differences between the enacted tax rate and the effective rate shown in the statement of operations of CEMEX,
S.A.B. de C.V.
As of December 31, 2022, 2021 and 2020, these differences were as follows:
2022 2021 2020
% $ % $ % $
Enacted income tax rate ..........................................................
(
30.0
)
(
4,858
)
(
30.0
)
(
4,474
)
(
30.0
)
9,704
Inflation ad
j
ustments ...............................................................
(
29.1
)
(
4,710
)
(
33.4
)
(
4,980
)
7.5
(
2,413
)
Changes in deferred tax assets
1
.............................................. 57.6 9,333 54.6 8,146 (5.9) 1,913
Non-deductible and other items ............................................. 8.5 1,384 10.6 1,580 29.1 (9,421)
Effective tax rate and tax (expense) benefit ........................ 7.0 1,149 1.8 272 0.7 (217)
1 Refers to the effects in the effective income tax rate associated with changes during the period in the amount of deferred income tax assets related to tax loss
carryforwards.
22) STOCKHOLDERS’ EQUITY
As of December 31, 2022 and 2021, stockholders’ equity excludes investments in CPOs of CEMEX, S.A.B. de C.V. held by subsidiaries of $156
(US$8) (20,541,277 CPOs) and $287 (US$14) (20,541,277 CPOs), respectively, which were eliminated within “Other equity reserves and subordinated
notes.”
22.1) COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
As of December 31, 2022 and 2021, common stock and additional paid-in capital was as follows:
2022 2021
Common stoc
k
.........................................................................................................................................................
$
4,164 4,164
Additional
p
ai
d
-in ca
p
ital ........................................................................................................................................
101,408 101,408
$
105,572 105,572
Effective as of December 31, 2020, the Company’s management approved restitution to the line item of “Retained earnings” for $37,639, by means of
transfer with charge to the line item of “Additional paid-in capital.” This transfer represents a reclassification between line items within CEMEX,
S.A.B. de C.V.’s stockholders’ equity that does not affect its amount.
As of December 31, 2022 and 2021, the common stock of CEMEX, S.A.B. de C.V. was represented as follows:
2022 2021
Shares
1
Series A
2
Series B
2
Series A
2
Series B
2
Subscribed and
p
aid shares ..................................................................... 29,016,656,496 14,508,328,248 29,457,941,452 14,728,970,726
Unissued shares authorized for executives’ stock compensation
p
ro
g
rams ................................................................................................. 881,442,830 440,721,415 881,442,830 440,721,415
Re
p
urchased shares
3
.............................................................................. 441,284,956 220,642,478
–
–
30,339,384,282 15,169,692,141 30,339,384,282 15,169,692,141
1
As of December 31, 2022 and 2021, 13,068,000,000 shares correspond to the fixed portion, and 32,441,076,423 shares as of December 31, 2022 and 2021, correspond
to the variable portion.
2
Series “A” or Mexican shares must represent at least 64% of CEMEX, S.A.B. de C.V.’s capital stock; Series “B” or free subscription shares must represent at most
36% of CEMEX, S.A.B. de C.V.’s common stock.
3
Shares repurchased under the share repurchase program authorized by the Company’s shareholders.
On March 24, 2022, stockholders at the ordinary general shareholders’ meeting of CEMEX, S.A.B. de C.V. approved: (a) setting an amount of US$500
or its equivalent in Pesos as the maximum amount of resources through year 2022 and until the next ordinary general shareholders’ meeting of the
Parent Company that CEMEX, S.A.B. de C.V. may use for the acquisition of its own shares or securities that represent such shares; b) authorize the
Company’s Board of Directors to determine the bases on which the acquisition and placement of any such shares shall be instructed, designate the
persons that shall make the decisions to acquire or place them, appoint those responsible for carrying out the transaction and giving the corresponding
notices to the authorities; and (c) designation of the members of CEMEX’s Board of Directors, as well as members of the Audit, Corporate Practices
and Finance, and Sustainability Committees.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
37
Common stock and additional paid-in capital – continued
On March 25, 2021, stockholders at the annual ordinary shareholders’ meeting (the “Shareholders' Meeting”) of CEMEX, S.A.B. de C.V. approved:
(i) setting the amount of US$500 or its equivalent in Pesos as the maximum amount of resources through year 2021 and until the next ordinary general
shareholders’ meeting of CEMEX, S.A.B. de C.V. is held for the acquisition of its own shares or securities that represent such shares; (ii) the decrease
of the variable part of CEMEX, S.A.B. de C.V.’s share capital through the cancellation of (a) 1,134 million shares repurchased during the 2020 fiscal
year, under the share repurchase program and (b) and aggregate of 3,409.5 million shares that were authorized to guarantee the conversion of then
existing convertible securities, as well as for any new issuance of convertible securities and/or to be subscribed and paid for in a public offering or
private subscription; and (iii) the appointment of the members of the Board of Directors, the Audit Committee, the Corporate Practices and Finance
Committee (which reduced its members from four to three) and the Sustainability Committee of CEMEX, S.A.B. de C.V.
On March 26, 2020, the Shareholders' Meeting of CEMEX, S.A.B. de C.V. approved: (i) setting the amount of US$500 or its equivalent in Pesos as
the maximum amount of resources through year 2020 and until the next ordinary Shareholders' Meeting is held for the acquisition of its own shares or
securities that represent such shares; and (ii) the cancellation of shares of repurchased during the 2019 fiscal year and the remained in CEMEX, S.A.B.
de C.V.’s treasury after the maturities of the November 2019 Mandatory Convertible Notes and the 3.72% Convertible Notes, except for the minimal
conversion. Under the 2020 share repurchase program, CEMEX, S.A.B. de C.V. repurchased 378.2 million CEMEX, S.A.B. de C.V. CPOs, at a
weighted-average price in Pesos equivalent to 0.22 Dollars per CPO. The total amount of these CPO repurchases, excluding value-added tax, was
US$83. On April 8, 2020, CEMEX, S.A.B. de C.V. announced that, to enhance its liquidity, it suspended the share repurchase program for the remainder
of 2020 (note 2).
In connection with the long-term executive share-based compensation programs, in 2022 and 2021 CEMEX, S.A.B de C.V. did not issue shares.
22.2) RETAINED EARNINGS
CEMEX, S.A.B. de C.V.’s net income for the year is subject to a 5% allocation toward a legal reserve until such reserve equals one fifth of the equity
represented by the common stock. As of December 31, 2022, 2021 and 2020, the legal reserve amounted to $1,804. As mentioned in note 22.1, effective
as of December 31, 2020, CEMEX, S.A.B. de C.V. incurred a restitution of retained earnings from additional paid-in capital for $37,639.
22.3) OTHER EQUITY RESERVES AND SUBORDINATED NOTES
As of December 31, 2022 and 2021, the caption of other equity reserves and subordinated notes was integrated as follows:
2022 2021
Other equity reserves .......................................................................................................................................
$
13,108
27,135
Subordinated notes ..........................................................................................................................................
19,786 19,786
$
32,894
46,921
Subordinated notes
On June 8, 2021, CEMEX, S.A.B. de C.V. issued one series of US$1,000 5.125% subordinated notes with no fixed maturity. After issuance costs,
CEMEX, S.A.B. de C.V. received US$994. Considering that CEMEX, S.A.B. de C.V.’s subordinated notes have no fixed maturity date, there is no
contractual obligation for CEMEX, S.A.B. de C.V. to deliver cash or any other financial assets, the payment of principal and interest may be deferred
indefinitely at the sole discretion of CEMEX, S.A.B. de C.V. and specific redemption events, are fully under CEMEX, S.A.B. de C.V.’s control, under
applicable IFRS, these subordinated notes issued by CEMEX, S.A.B. de C.V. qualify as equity instruments and are classified within controlling interest
stockholders’ equity. CEMEX, S.A.B. de C.V. has a repurchase option on the fifth anniversary of the subordinated notes. In the event of liquidation of
CEMEX, S.A.B. de C.V.’s due to commercial bankruptcy, the subordinated notes would come to the liquidation process according to its subordination
after all liabilities.
Coupon payments on the subordinated notes were included within “Other equity reserves and subordinated notes” and amounted to $1,079 in 2022
and $604 in 2021.
22.4) EXECUTIVE SHARE-BASED COMPENSATION
Stock/based awards granted to executives are defined as equity instruments, considering that the services received from employees are settled by
delivering shares. The cost of these equity instruments represents their estimated fair value at the grant date of each plan and is recognized in the
statement of operations during the periods in which the executives render services and vest the exercise rights.
CEMEX, S.A.B. de C.V. sponsors different long-term restricted share-based compensation programs for a wide range of executives, including top
management, executives and other key performers, providing for the grant of CEMEX CPOs (jointly the “Share-Based Compensation Programs”).
Shares under each annual plan are initially restricted and are proportionately released to the executives as services are rendered at the end of each year
over periods of three to four years depending on the plan, to the extent they remain in the Company at the settlement date, except for the top
management’s plan, which, in addition, comprises a tri-annual internal and external performance metrics that depending on their weighted achievement,
may result in a final award at the end of the third year between 0% and 200% of the target for each annual program.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
38
Executive share-based compensation – continued
The required Parent Company’s CPOs that are delivered to the executives to meet the Company’s awards are either newly issued or purchased, at the
Company’s election. For these purposes, an external trust in which the executives are beneficiaries, receives funding from CEMEX to incur these
purchases. Under the Share-Based Compensation Programs, during 2022, 2021 and 2020, executives on a global basis received 109.2 million CPOs,
93.4 million CPOs and 83.8 million CPOs, respectively. As of December 31, 2022, there are 264.4 million CPOs associated with these annual programs
that are expected to be delivered in the following years as the executives render services and performance metrics are met, when applicable.
The compensation expense related to the programs described above, as determined considering the fair value of the awards at the date of grant, is
recognized in the operating results of each subsidiary where the executives render services against other equity reserves. In addition, the compensation
expense related to the beneficiaries that render services directly in the Parent Company amounted to $508 in 2022 and $392 in 2021. In 2020, the Parent
Company had no employees. Upon vesting of the awards, in case of newly issued CPOs, the Parent Company reclassifies the fair value of the stock
from other equity reserves to additional paid-in capital within equity, and when the Parent Company funds the executives, it recognizes a decrease in
other equity reserves against cash. As of December 31, 2022 and 2021, there were no options or commitments to make payments in cash to the
executives based on changes in the market price of the Parent Company’s CPO.
23) COMMITMENTS
23.1) GUARANTEES
As of December 31, 2022 and 2021, CEMEX, S.A.B. de C.V., had guaranteed loans of certain subsidiaries for US$40 ($780) and US$40 ($814),
respectively.
23.2) OTHER COMMITMENTS
On October 24, 2018, CEMEX, S.A.B. de C.V. entered into an energy financial hedge agreement in Mexico, commencing October 1, 2019 and for a
period of 20 years. Through the aforementioned contract, the Company fixed the megawatt hour cost over an electric energy volume of 400 thousand
megawatts hour per year, through the payment of US$25.375 price per megawatt hour of electric power in exchange for a market price. The committed
price to pay will increase 1.5% annually. The differential between the agreed price and the market price is settled monthly. CEMEX, S.A.B. de C.V.
considers this agreement as a hedge for a portion of its aggregate consumption of electric energy in Mexico and recognizes the result of the exchange
of price differentials described previously in the statement of operations as a part of the costs of energy. During 2022 and 2021, CEMEX, S.A.B. de
C.V. received US$3 and US$3, respectively. CEMEX, S.A.B. de C.V. does not record this agreement at fair value due to the fact that there is not a
deep market for electric power in Mexico that would effectively allow for its valuation.
On April 28, 2017, CEMEX, S.A.B. de C.V. concluded the sale of its assets and activities related to the ready-mix concrete pumping business in
Mexico to Cementos Españoles de Bombeo, S. de R.L., subsidiary in Mexico of Pumping Team S.L.L. (“Pumping Team”), specialist in the supply of
ready-mix concrete pumping services based in Spain, for an aggregate price of $1,649, which included the sale of fixed assets for $309, plus
administrative and client and market development services, as well as the lease of facilities in Mexico that CEMEX, S.A.B. de C.V. will supply to
Pumping Team over a period of ten years with the possibility to extend for three additional years, for an aggregate initial amount of $1,340, which are
recognized each period as services are rendered. There is the possibility of a contingent revenue or expense subject to results for up to $557 linked to
annual metrics beginning in the first year. For the contingent revenue agreement, the contingent revenue is calculated for a twelve-month period
commencing May of each year until the period 2020. CEMEX, S.A.B. de C.V. recognized an expense of $135 for the period 2019-2020 and income
of $12 for the period 2018-2019.
23.3) CONTRACTUAL OBLIGATIONS
As of December 31, 2022, CEMEX, S.A.B. de C.V. had the following contractual obligations are as follows:
(Millions of U.S. Dollars) 2022
Obligations
Less than
1 year
1-3
Years
3-5
Years
More than
5 Years Total
N
on-current debt
1
..............................................................................................
US$
–
1,596 2,436 2,578 6,610
Leases
2
............................................................................................................... 37 46 14 12 109
Total debt and other financial obligations ................................................... 37 1,642 2,450 2,590 6,719
Short-term and low-value assets rentals
3
..........................................................
2 1 – – 3
Pension
p
lans and other benefits
4
.....................................................................
33 57 53 114 257
Interest
p
a
y
ments on debt
5
................................................................................. 384 684 387 366 1,821
Total contractual obligations .............................................................................
US$
456 2,384 2,890 3,070 8,800
$
8
,
892 46
,
488 56
,
355 59
,
865 171
,
600
1 The schedule of debt payments, which includes current maturities, does not consider the effect of any refinancing of debt that may occur during the following years.
In the past, CEMEX, S.A.B. de C.V. has replaced its long-term obligations for others of a similar nature.
CEMEX, S.A.B. DE C.V.
Notes to the Parent Company-only Financial Statements
As of December 31, 2022, 2021 and 2020
(Millions of Mexican Pesos)
39
Contractual obligations – continued
2 Represent nominal cash flows. As of December 31, 2022, the NPV of future payments under such leases was US$87, of which, US$39 refers to payments from
1 to 3 years and US$11 refer to payments from 3 to 5 years.
3 The amounts represent nominal cash flows. Refers to the estimated rental payments under short-term lease contracts and assets of low value. These contracts are not
recognized as assets for the right-of-use and other financial obligations considering the exemption adopted by CEMEX, S.A.B. de C.V.
4 Represents estimated annual payments under these benefits for the next 10 years (note 20), including the estimate of new retirees during such future years.
5 Estimated cash flows on floating rate denominated debt were determined using the floating interest rates in effect as of December 31, 2022.
In addition to the contractual obligations included in the table above, on October 25, 2022, an indirect subsidiary of CEMEX, S.A.B de C.V. sold to
Advent International (“Advent”) a 65% stake in Neoris N.V. (“Neoris”), while surrendering control to Advent, the Company retained through its
indirect subsidiary an approximate 35% stake in Neoris. As part of this partnership with Advent, the Company signed with Neoris a 5-year contract
globally beginning in 2023 until 2027 for the acquisition by CEMEX of digitalization services and solutions for an annual amount of $55, of which, it
is expected that some portion of the annual cost under this contract will be incurred directly by the Parent Company.
Moreover, on February 8, 2022, CEMEX renewed or entered into new agreements with six service providers in the fields of data processing services
(back office) in finance, accounting and human resources; as well as Information Technology (“IT”) infrastructure services, support and maintenance
of IT applications in the countries in which CEMEX operates, for a tenure of five to seven years at an average annual cost of $60. These contracts
replaced the agreements CEMEX maintained with IBM which expired on August 31, 2022. It is expected that some portion of the annual cost under
these contracts will be incurred directly by the Parent Company.
24) CONTINGENCIES
CEMEX, S.A.B. de C.V. is involved in various legal proceedings, which have not required the recognition of accruals, considering that the probability
of loss is less than probable or remote. In certain cases, a negative resolution may represent a decrease in future revenues, an increase in operating costs
or a loss. Nonetheless, until all stages in the procedures are exhausted in each proceeding, CEMEX, S.A.B. de C.V. cannot assure the achievement of
a final favorable resolution.
As of December 31, 2022, the most significant events with a determinable potential loss, the disclosure of which would not impair the outcome of the
relevant proceeding, were as follows:
In December 2016, CEMEX, S.A.B. de C.V. received subpoenas from the SEC seeking information to determine whether there have been any violations
of the U.S. Foreign Corrupt Practices Act stemming from the Maceo Project. These subpoenas do not mean that the SEC has concluded that CEMEX,
S.A.B. de C.V. or any of its affiliates violated the law. CEMEX, S.A.B. de C.V. has been cooperating with the SEC and intends to continue cooperating
fully with the SEC. The DOJ also opened an investigation into this matter. In this regard, on March 12, 2018, the DOJ issued a grand jury subpoena to
CEMEX, S.A.B. de C.V. relating to its operations in Colombia and other jurisdictions. CEMEX, S.A.B. de C.V. intends to cooperate fully with the
SEC, the DOJ and any other investigatory entity. As of December 31, 2022, CEMEX, S.A.B. de C.V. is unable to predict the duration, scope, or
outcome of either the SEC investigation or the DOJ investigation, or any other investigation that may arise, or, because of the current status of the SEC
investigation and the preliminary nature of the DOJ investigation, the potential sanctions which could be borne by the Parent Company, or if such
sanctions, if any, would have a material adverse impact on CEMEX results of operations, liquidity or financial position.
In addition, as of December 31, 2022, CEMEX, S.A.B. de C.V. is involved in various legal proceedings of minor impact that have arisen in the ordinary
course of business. These proceedings involve: 1) product warranty claims; 2) claims for environmental damages; 3) indemnification claims relating
to acquisitions or divestitures; 4) claims to revoke permits and/or concessions; and 5) other diverse civil, administrative, commercial and lawless
actions. CEMEX, S.A.B. de C.V. considers that in those instances in which obligations have been incurred, CEMEX, S.A.B. de C.V. has accrued
adequate provisions to cover the related risks. CEMEX, S.A.B. de C.V. believes these matters will be resolved without any significant effect on its
business, financial position or results of operations. In addition, in relation to certain ongoing legal proceedings, CEMEX, S.A.B. de C.V. is sometimes
able to make and disclose reasonable estimates of the expected loss or range of possible loss, as well as disclose any provision accrued for such loss,
but for a limited number of ongoing legal proceedings, CEMEX, S.A.B. de C.V. may not be able to make a reasonable estimate of the expected loss or
range of possible loss or may be able to do so but believes that disclosure of such information on a case-by-case basis would seriously prejudice
CEMEX, S.A.B. de C.V.’s position in the ongoing legal proceedings or in any related settlement discussions. Accordingly, in these cases, CEMEX,
S.A.B. de C.V. has disclosed qualitative information with respect to the nature and characteristics of the contingency but has not disclosed the estimate
of the range of potential loss.
40
Independent auditors’ report
TotheBoardofDirectorsandStockholders
CEMEX,S.A.B.deC.V.
MillionsofMexicanpesos
Opinion
WehaveauditedtheseparatefinancialstatementsofCEMEX,S.A.B.de C.V.(“theCompany”),whichcomprisethe
separatestatementsoffinancialpositionasatDecember31,2022and2021,theseparatestatementsofoperations,
comprehensiveincome(loss),changesinstockholders’equityandcashflowsfortheyearsendedDecember31,2022,
2021and2020,andnotes,comprisingsignificantaccountingpoliciesandotherexplanatoryinformation.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the
unconsolidatedfinancialpositionoftheCompanyasatDecember31,2022and2021,anditsunconsolidatedfinancial
performanceanditsunconsolidatedcash
flowsfortheyearsendedDecember31,2022,2021and2020inaccordance
withInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard(IFRS ).
BasisforOpinion
We cond ucted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
thosestandardsarefurtherdescribedintheAuditors’ResponsibilitiesfortheAuditoftheFinancialStatementssection
ofourreport.WeareindependentoftheCompanyinaccordancewiththeethicalrequirementsthatarerelevantto
ourauditofthefinancialstatementsinMexico,andwehavefulfilledourotherethicalresponsibilitiesinaccordance
withtheserequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropria t etoprovide
abasisforouropinion.
KeyAuditMatters
Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthe
separatefinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditofthe
separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opiniononthesematters.
41
Valuationofthecarryingamountofinvestmentsinsubsidiaries
Thekeyauditmatter Howthematterwasaddressedinouraudit
As discussed in note 14.2 to the separate financial
statements, the balance of equity accounted
investees as of December 31, 2022 is $355,529
which represented 84% of the total assets of the
Company at such date and which is substantially
comprised of the Company’s investment in its
subsidiaries.
Weidentifiedthe
valuationofthecarryingamount
oftheCompany’sinvestmentsinitssubsidiariesasa
keyauditmatterduetothejudgmentinvolvedinthe
determinationofwhetheranimpairment triggering
eventhasoccurred.
Ourauditproceduresinthisareaincluded,amongothers:
Wehaveauditedtheconsolidatedfinancialstatementsof
the
Company and issuedourauditopinion thereon on February
8
th
, 2023. When performing the audit of the consolidated
financial statements we evaluated the analysis of goodwill
impairment of the subsidiaries of the Company where we
identified a higher risk. We used such analysis to assess if
there are triggering events that could be indicative of
impairmentintheCompany’sinvestments
initssubsidiaries,
and if the conclusions of the Company in this regard are
appropriate.
EmphasisofMatter
As described in note 3, the accompanying separate financial statements have been prepared to be used by the
Management of CEMEX, S.A.B. de C.V. as well as to comply with certain legal and tax requirements. The financial
informationthereindoesnotincludetheconsolidationofthefinancialstatementsofitssubsidiaries,whichhavebeen
accountedforunderthe equity method.In assessingthefinancialsituation andresultsoftheeconomice ntity, we
mustrefertotheconsolidatedfinancialstatementsofCEMEX,S.A.B.deC.V.andsubsidiariesasofDecember31,2022
and2021andfortheyearsendedDecember31,
2022,2021and2020,whichwereissuedseparatelyonFebruary8
th
,
2023inaccordancewithIFRS.Ouropinionisnotmodifiedinrespectofthism atter.
ResponsibilitiesofManagementandThoseChargedwithGovernancefortheSeparateFinancialStatements
Management is responsible for the preparation and fair presenta tion of the separate financial statements in
accordancewithIFRS,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparation
ofseparatefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
In preparing the
separate financial statements, management is responsible for assessing the Company’s ability to
continueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcern
basisof accounting unless managementeitherintendstoliquidatetheCompany or to cease operations, or has no
realisticalternative
buttodoso.
ThosechargedwithgovernanceareresponsibleforoverseeingtheCompany´sfinancialreportingprocess.
42
Auditors’ResponsibilitiesfortheAuditoftheSeparateFinancialStatements
Ourobjectivesaretoobtainreasonableassuranceaboutwhethertheseparatefinancialstatementsasawholeare
freefrom materialmisstatement, whetherdueto fraud orerror,andtoissueanauditors’reportthat includesour
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in
accordancewithISAswillalwaysdetectamaterialmisstatementwhenitexists. Misstatementscanarisefromfraud
orerrorandareconsideredmaterialif,individuallyorintheaggregate,theycou ldreasonablybeexpectedtoinfluence
theeconomicdecisionsofuserstakenonthebasisof
theseseparatefinancialstatements.
AspartofanauditinaccordancewithISAs,weexerciseprofessionaljudgmentandmaintainprofessionalscepticism
throughouttheaudit.Wealso:
Identifyandassesstherisksofmaterialmisstat ementoftheseparatefinancialstatements,whetherdueto
fraud or error, design and perform audit procedures
responsive to those risks, and obtain a uditevidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,
forgery,intentionalomissions,misrepresentations,orthe
overrideofinternalcontrol.
Obtainanunderstandingofinternalcontrolrelevant tothea uditinordertodesignauditproceduresthat
areappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectiveness
oftheCompany’sinternal control.
Evaluatetheappropriatenessofaccountingpolicies
usedandthereasonablenessofaccount ing estimates
andrelateddisclosuresmadebymanagement.
Concludeontheappropriatenessofmanagement’suseofthe goingconcernbasisofaccountingand,based
ontheauditevidenceobtained,whetheramaterialuncertainty existsrelatedtoeventsorconditionsthat
maycastsignificantdoubt
ontheCompany’sabilitytocontinueasagoing concern.Ifweconclude thata
material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosuresintheseparatefinancialstatementsor,ifsuchdisclosuresareinadequa te, tomodifyouropinion.
Ourconclusionsarebased
ontheauditevidenceobtaineduptothedateofourauditors’report.However,
futureeventsorconditionsmaycausetheCompanytoceasetocontinueasagoingconcern.
Evaluatetheoverallpresentation,structureandcontentoftheseparatefinancial statements,includingthe
disclosures,an dwhethertheseparate
financialstatements representtheunderlyingtransactionsandevents
inamannerthatachievesfairpresentation.
Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusiness
activitieswithintheGrouptoexpressanopinionontheseparatefinancialstatements.Weareresponsible
for the direction, supervision and
performance of the group audit.We remain solely responsible forour
auditopinion.
Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtiming
of the auditandsignificant audit findings , including any significant deficiencies in internal control that we identify
duringouraudit.
43
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguardsapplied.
Fromthematterscommu nicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmost
significancein the audit of theseparatefinancial statements ofthecurrentperiodandarethereforethekeyaudit
matters.Wedescribethesemattersinourauditors’reportunle ss laworregulationprecludespublic
disclosureabout
thematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinour
reportbecause theadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterest
benefitsofsuchcommunication.
KPMGCárdenasDosal,S.C.
C.P.C.ArturoGonzález
Prieto
Monterrey,N.L.
February16,2023
